AkzoNobel has rejected a nearly €13 billion takeover proposal from Japan’s Nippon Paint Holdings and US-based Sherwin-Williams, opting instead to proceed with its previously agreed merger with American coatings company Axalta.
The Dutch paint maker, known globally for brands including Dulux, said the unsolicited counter-offer significantly undervalued the company and failed to provide sufficient certainty regarding regulatory approvals and the proposed breakup of the business.
AkzoNobel’s board unanimously dismissed the proposal, reaffirming its commitment to the all-share merger with Axalta that was announced in November last year. The planned transaction would create one of the world’s largest coatings companies with a combined enterprise value of approximately $25 billion.
The rejection triggered a strong reaction in financial markets. AkzoNobel shares surged roughly 20% in Wednesday trading after the company disclosed details of the rival approach and its decision to reject it.
The competing all-cash proposal valued AkzoNobel at €73 per share, representing a premium of nearly 40% compared with the company’s closing share price of €52.50 on Tuesday.
According to AkzoNobel, the offer was initially submitted on April 29 and formally rejected by the company on May 1.
Under the proposed breakup structure, Nippon Paint would acquire AkzoNobel’s decorative paints and industrial coatings divisions, while Sherwin-Williams would take ownership of the remaining operations, including automotive and specialty coatings businesses.
AkzoNobel argued that the proposal carried substantial execution risks because of the complexity involved in dividing the company between two buyers and securing regulatory approvals across multiple jurisdictions.
The company said the offer “did not come close” to reflecting the long-term value of the business and its future growth prospects.
Executives also emphasized that the company remains focused on completing the Axalta merger, which management believes provides stronger strategic alignment and better long-term benefits for shareholders.
The merger between AkzoNobel and Axalta revived discussions that had circulated nearly a decade ago when the two coatings groups first explored a possible combination.
The combined entity would maintain dual headquarters in Amsterdam and Philadelphia while securing a primary listing in New York.
Together, the merged companies are expected to generate annual revenue of approximately $17 billion, placing the group among the largest global players in the paints and coatings sector.
Executives previously said the merger could produce around $600 million in cost savings within three years through operational synergies and streamlined supply chains.
As part of the transaction, AkzoNobel shareholders are expected to own 55% of the merged company, while Axalta investors would hold the remaining 45%.
AkzoNobel also plans to distribute a cash dividend of around €2.5 billion to shareholders as part of the merger arrangement.
Under the leadership structure outlined in the agreement, AkzoNobel Chief Executive Greg Poux-Guillaume would lead the combined company, while Axalta CEO Chris Villavarayan would serve as deputy chief executive.
The rival bid from Nippon Paint and Sherwin-Williams highlights the growing competition in the global coatings industry as major players pursue consolidation to strengthen market share and expand product portfolios.
Demand for coatings products remains closely tied to industries including construction, automotive manufacturing, aerospace, industrial equipment, and infrastructure development.
Companies in the sector have also faced pressure from higher raw material costs, slowing global manufacturing activity, and changing environmental regulations requiring investment in more sustainable products.
For Nippon Paint, the acquisition attempt represented an opportunity to significantly expand its footprint in Europe while reuniting ownership of the Dulux brand globally.
Nippon Paint already owns the Dulux trademark in Australia and New Zealand, while AkzoNobel controls the brand in many other international markets.
Sherwin-Williams, meanwhile, has long pursued expansion opportunities in industrial and automotive coatings to complement its dominant North American architectural paints business.
The two companies said in a joint statement later Wednesday that their proposal would deliver “significant strategic benefits” for AkzoNobel’s businesses and stakeholders.
They added that the offer did not contain financing conditions and was not dependent on shareholder approval from either bidder.
The companies also said they are evaluating possible next steps following AkzoNobel’s rejection.
The takeover battle comes during a broader period of restructuring at AkzoNobel.
The Dutch company has spent recent years attempting to improve profitability through cost-cutting measures, job reductions, and the sale of non-core assets.
Pressure for strategic changes intensified after activist investor Cevian Capital increased its stake in AkzoNobel to approximately 10%, making it the company’s largest shareholder.
Cevian has pushed management to improve operational performance and unlock shareholder value after years of weaker-than-expected financial results.
The investment firm declined to comment directly on the rejected takeover proposal but confirmed that one of its representatives on the board participated in the vote against the offer.
AkzoNobel has faced repeated takeover interest over the past decade.
In 2017, US chemicals company PPG Industries launched a highly publicized campaign to acquire the Dutch group.
AkzoNobel rejected three separate bids from PPG, leading to a prolonged corporate battle that drew political attention in the Netherlands.
Dutch lawmakers and government officials voiced concerns at the time over the possible loss of a major national industrial company to a foreign buyer.
Ultimately, PPG abandoned its pursuit after failing to win support from AkzoNobel’s management and supervisory board.
A year later, AkzoNobel sold its specialty chemicals division to private equity firm Carlyle Group and Singapore sovereign wealth fund GIC in a transaction valued at €10.1 billion including debt.
That disposal was one of Europe’s largest private equity deals at the time and allowed AkzoNobel to focus more heavily on its core paints and coatings operations.
The coatings sector has become increasingly competitive as manufacturers seek scale advantages and broader geographic reach to offset volatile economic conditions.
Consolidation has accelerated in recent years as companies attempt to improve pricing power, invest in research and development, and expand into fast-growing markets.
AkzoNobel’s decision to continue with Axalta rather than pursue the breakup proposal reflects management’s preference for long-term strategic integration over short-term shareholder gains.
The Axalta merger would also preserve AkzoNobel as a unified coatings company rather than dismantling its operations among multiple buyers.
Regulatory scrutiny is also expected to remain a major factor for future large-scale transactions in the coatings industry because of competition concerns in several regional markets.
Even after rejecting the current proposal, AkzoNobel may continue to face investor pressure if shareholders believe the counter-offer provided superior value compared with the Axalta merger terms.
For now, however, the company appears determined to move ahead with its planned combination with Axalta as it seeks to reshape itself into a larger global coatings powerhouse.
