Race for Akzo Nobel India: JSW Paints & TPG explore tie-up

Based on the market cap of the Indian arm at the end of day's trade on January 17, the parent's stake is valued at around Rs 13,043 crore

JSW Paints, a group company of Sajjan Jindal-led diversified conglomerate JSW Group, and top private equity firm TPG have held preliminary discussions for a potential tie-up as part of the ongoing race to buy the majority stake held by Dulux paint maker AkzoNobel India's Dutch parent, multiple industry sources in the know told Moneycontrol.

"It is a large cheque size and JSW Paints is very keen on this inorganic opportunity and has held early stage talks with TPG to join forces. No final call has been taken yet on the proposed consortium and structure," said one of the persons above.

Two other persons confirmed the discussions between JSW Paints and TPG, adding that the plans may change later if required. Deliberations with other private equity players could not be ruled out, they added.

A fourth person told Moneycontrol that other suitors like Indigo Paints, Berger Paints and Aditya Birla group have also expressed preliminary interest in the proposed transaction, which is being run by investment bank Citi.

All the four persons above spoke on the condition of anonymity to Moneycontrol.

Dutch firm AkzoNobel NV holds a 74.76 percent stake in AkzoNobel India and any attempt at purchasing a controlling stake will trigger an open offer. Based on the market cap of the Indian arm at the end of day's trade on January 17, the parent's stake is valued at around Rs 13,043 crore. The domestic unit's stock price has rallied by 43 percent last year.

A recent example of a domestic strategic player partnering a global firm for a big-bang deal was when the Bhartia family, promoters of the Jubilant Bhartia group, joined Goldman Sachs to acquire a 40 percent stake in Hindustan Coca-Cola Beverages for a transaction valued in excess of Rs 12,000 crore.

In response to an email query from Moneycontrol, Akzo Nobel said , "We do not comment on market rumours." Citi could not be reached for an immediate comment.

A JSW Group spokesperson and TPG declined to comment on the tie-up talks.

According to a recent report by The Telegraph, Sundaresan A.S, Joint MD & CEO of JSW Paints, indicated the firm's interest in Akzo Nobel India at the Indian Paint Conference organised by Indian Paints Association.

Elaborating on the rationale, Sundaresan said that the firm had "certain brands, decent brand value and there could be complementarity in terms of geographies."

In May 2024, JSW Paints , which complements the group's offerings in steel and cement, said it had hit a turnover of Rs 2,000 crore in FY24 and achieved operating profit within five years of operations. The firm is targeting revenues of Rs 5,000 crore by 2026, the Telegraph report added.

An email query to Aditya Birla Group, which is present in the paints segment through its brand Birla Opus, remained unanswered at the time of publishing this article. An email query to Indigo Paints also remained unanswered.

However, in November, during a call with analysts post the earnings of Grasim Industries, the Birla Opus management denied pursuing inorganic growth in response to reports linking the group to Akzo Nobel India.

When contacted by Moneycontrol, Berger Paints India shared an earlier clarification from the firm to the stock exchanges - "Berger Paints India Limited considers various proposals for inorganic growth and diversification as a matter of routine exercise. At present, there is no material event/information/development in this matter to disclose under the listing regulations."

Incidentally, in an interaction with CNBC-TV18 on November 6, Berger Paints had said that they are open to acquiring the Dutch parent's promoter stake in Akzo Nobel India, once there was a firm decision on an exit.

Market leader Asian Paints had also evinced interest in the asset in a separate interaction with CNBC-TV18. Media reports have also named Pidilite Industries as a suitor.

The Akzo Nobel strategy

In October 2024, Akzo Nobel NV announced that with an initial focus on its decorative paints positions in South Asia, it is conducting a strategic review of its portfolio in order to redeploy capital towards growing its core coatings businesses.

As per an exchange disclosure earlier this week, Akzo Nobel India will start exploring the potential sale of its powder coatings business as well as the R&D operations to a separate, indirect wholly-owned arm - Akzo Nobel NV, as requested by parent entity.

The board of Akzo Nobel India also informed that it has been asked to start the process of potential acquisition of intellectual properties under the decorative paints business that are currently owned by Akzo Nobel NV.

Post the proposed internal restructuring, Akzo Nobel India will majorly consist of the decorative paints business.