Akzo Nobel India shares rally 6% as JSW Paints enters exclusive buyout talks

Shares of Akzo Nobel India climbed as much as 5.9% on Friday to Rs 3,685.95 on the BSE after a report said JSW Paints had entered into exclusive talks to acquire the Indian unit of Dutch paints major AkzoNobel NV, outpacing a rival bid from a consortium of Advent International and Indigo Paints.

JSW Paints has emerged as the frontrunner to acquire Akzo Nobel India, The Economic Times reported Friday, citing people aware of the development. The two parties have signed an exclusivity agreement to negotiate terms and finalise documentation for a share purchase agreement, according to the report.

Both JSW Paints and the rival consortium had submitted binding offers late last month. “Hectic deliberations have been underway in the past few weeks,” ET reported, adding that negotiations started at a significant discount to the current market value but the bid-ask gap has now narrowed substantially.

The Sajjan Jindal-led company is offering a 5–8% discount to the prevailing market price, valuing the promoter stake at Rs 11,854.63 crore ($1.39 billion). Akzo Nobel India’s parent, AkzoNobel NV, owns a 74.76% stake. The stock closed Thursday at Rs 3,482, giving it a market value of Rs 15,857.14 crore.

If successful, the deal will elevate JSW Paints to the fourth-largest player in India’s decorative paints market, close behind Kansai Nerolac, and place it second in the industrial paints segment. The acquisition would also help the company move closer to the Rs 10,000 crore revenue milestone, a prerequisite for a potential IPO.

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“Given that Akzo Nobel India’s Dulux Paints is present in the luxury and uber-luxury category and in urban markets, a deal will give JSW Paints significant heft in the market,” said industry executives cited by ET.JSW Paints, which entered the paints sector six years ago, has yet to crack the top three in decorative paints. It faces stiff competition from newer entrants like Birla Opus, which gained a 3–4% market share in the third quarter of FY25 alone, according to the report.

The proposed acquisition is expected to be followed by a reverse merger of privately held JSW Paints with the listed Akzo Nobel India, The Economic Times reported. It remains unclear whether AkzoNobel NV will retain any stake in the combined entity.

To finance the deal, JSW is in talks with global banks including Standard Chartered Bank, MUFG, and Barclays, and is also exploring structured financing of Rs 4,000–4,500 crore with private equity investors like Ares Capital, KKR, Goldman Sachs and Apollo Global Management. Promoters are expected to infuse Rs 2,500–3,000 crore as equity. The final deal size will depend on the outcome of the open offer.

JSW Paints managing director Parth Jindal had earlier described the Akzo Nobel India stake sale as an “exciting opportunity.” In January, he said, “There is no choice… I have to give everything I’ve got for Akzo Nobel India.”

Akzo Nobel India, which has a 7% market share, is among the most profitable players in the paints sector, producing 250 million litres annually and focusing on high-end decorative products. However, it has faced sector-wide challenges including shrinking margins and slower growth.

In February, the company sold its powder coatings business — contributing 12–14% of revenue — to its parent, which “took the shine off the deal for several potential suitors,” said industry executives cited by ET.

The decorative paints segment, which constitutes 75% of industry demand, is grappling with a margin squeeze amid heightened competition. Operating margins have dropped to 16% in H1FY25 from 20% the previous year, and are expected to fall to 14% by FY26, according to Care Ratings.

Akzo Nobel India’s Q3FY25 profit declined by 5%, partly due to a special dividend paid the previous year, with its industrial paints and automotive segments also underperforming.

Also read | JSW Paints set to add lustre with Akzo India buy

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