Nippon Paint, Sherwin-Williams end takeover pursuit, AkzoNobel shares tumble
By Dimitri Rhodes
AkzoNobel Takeover Bid and Market Impact
Termination of Acquisition Efforts
TOKYO/GDANSK, June 3 (Reuters) - Nippon Paint and Sherwin-Williams have terminated efforts to jointly acquire rival paint maker AkzoNobel, they said on Wednesday, sending the Dulux maker's shares 19% lower.
Market Reaction
The Dutch company's shares were at the bottom of Europe's STOXX 600 benchmark index and on track for their worst-ever trading day as of 1105 GMT.
Analyst Commentary
"A lot of people may have thought that another offer from Sherwin-Williams and Nippon Paint would be forthcoming," Berenberg analyst Sebastian Bray said.
Background and Reasons for Termination
The companies' decision to walk away followed AkzoNobel's rejection of their €12.5 billion ($14.5 billion) cash takeover offer last week.
Paint makers are seeking mergers to save money in the face of rising costs, intense competition and the uncertainty created by U.S. President Donald Trump's tariffs on imported goods.
AkzoNobel's Strategic Direction
AkzoNobel said in a press release that both its boards unanimously continued to recommend its planned merger with U.S. coatings maker Axalta.
It had previously said the takeover offer lacked certainty regarding regulatory clearances and would have split the company between the two suitors.
Valuation and Offer Details
"AkzoNobel's board clearly felt valuation was a major factor in rejecting two offers for the business, backing its own strategic push to buy Axalta," John West, global analysis lead at Mergermarket, told Reuters.
Bernstein analysts last week estimated that for AkzoNobel to engage with an offer, the suitors would likely need to fork up more than €78 per share, well above the €73 tabled by Nippon Paint and Sherwin-Williams.
Financial Implications for Suitors
Moody's meanwhile said that even the rejected bid may have stressed Sherwin-Williams' investment-grade rating, as its portion would likely have been financed mostly through debt.
"In my view, Nippon and Sherwin both have a reasonable amount of debt right now and Nippon especially might get a bit uncomfortable with the leverage if they were to push the deal," Bernstein analyst James Hooper said on Wednesday.
($1 = €0.8610)
(Reporting by Kantaro Komiya in Tokyo and Dimitri Rhodes in Gdansk; Editing by Jacqueline Wong and Milla Nissi-Prussak)
