Nippon Paint Offers $8.6 Billion for Akzo Nobel's Dulux Business, Again

Since Nippon Paint and Sherwin-Williams pulled their joint takeover bid for Akzo Nobel in May after two all-cash offers got rejected, Nippon has kept coming back with new proposals. The Tokyo-listed company confirmed Monday, July 13, that it submitted a €7.5 billion ($8.6 billion) offer for just Akzo Nobel's decorative paints business, according to Bloomberg News and Reuters.

This is a scaled-down ambition. Instead of buying all of Akzo Nobel, Nippon now wants the Dulux-branded decorative paints arm alone. Bloomberg reported the offer values that unit at roughly 12 times its projected 2026 earnings before interest, taxes, depreciation and amortization.

Akzo Nobel's management hasn't engaged with Nippon on this proposal, according to people familiar with the matter cited by Bloomberg. The Dutch company also hasn't told its own shareholders about the offer, those people said. Akzo Nobel did not respond to requests for comment from either Bloomberg or Reuters.

Nippon Paint's statement Monday was careful to say no decisions have been made. The company confirmed the offer exists but stopped short of calling it final or committed.

The Market Reacted Fast

Nippon Paint shares fell as much as 3.4% Monday, Bloomberg reported, the stock's biggest intraday decline in more than a month, before paring some of those losses. Spending nearly $9 billion to acquire a business unit whose owner won't take your calls carries real financial risk. Nippon shareholders are betting on the possibility this effort succeeds.

Why Akzo Nobel Keeps Saying No

Akzo Nobel has its own plan already in motion: a merger with U.S.-based Axalta Coating Systems, announced in November. Under that deal, Akzo Nobel would own 55% of the combined company and move its stock listing from Amsterdam to New York, creating a paint maker with an enterprise value of about $25 billion, according to Bloomberg.

When Nippon and Sherwin-Williams made their joint run at Akzo Nobel in full back in May, Akzo Nobel rejected it on the grounds that the bid would be hard to get past regulators and that splitting the company between two buyers made less sense than the Axalta merger already on the table, Reuters reported.

A single strategic merger with a clean ownership structure is often easier to execute and finance than a joint acquisition where two competitors have to divide up assets and coordinate integration. Akzo Nobel's board is on record saying the Axalta deal offers more certainty.

The Axalta merger isn't finished business, though. It still needs sign-off from the U.S. Federal Trade Commission, which requested more information from both companies in a May filing, according to Bloomberg. Shareholders of both Akzo Nobel and Axalta are scheduled to vote on the merger August 5, according to Reuters.

The Regulatory Angle Nippon Is Betting On

Nippon's strategic logic in going after just the decorative paints unit instead of the whole company is clear. Buying only the Dulux business avoids a lot of the overlap concerns regulators would have with a full takeover, since the decorative paints division is a narrower slice of Akzo Nobel's operations.

The decorative paints unit also gets nearly two-thirds of its revenue from Europe, Bloomberg reported, and a Nippon acquisition would reunify the Dulux brand globally under one owner. Akzo Nobel disclosed on an earnings call last year it was exploring a sale of parts of its decorative paints business in Southeast Asia specifically, but people familiar with Nippon's thinking told Bloomberg the company wants the entire unit, not a partial carve-out.

None of this is new territory for Nippon Paint. The company derailed merger talks between Axalta and Akzo Nobel back in 2017, then separately failed to close its own deal to buy Axalta that same year. Akzo Nobel also turned down a $29 billion unsolicited buyout offer from PPG Industries in 2017. This is a company with a decade-long habit of rejecting suitors.

What Happens Next

Akzo Nobel's silence leaves an open question: does the board bring this $8.6 billion offer to shareholders ahead of the August 5 vote on the Axalta merger, or does it keep pushing the Axalta deal through without formally addressing Nippon's bid at all? Shareholders currently have no confirmed timeline for when, or if, they'll get to weigh both options side by side before casting votes on the merger already on the table.