Nippon Paint is purchasing Akzo Nobel's decorative paint business in Southeast Asia for USD 1.35 billion (JPY 216 billion), funded with cash and debt. It includes businesses in Vietnam, Malaysia, Thailand, Australia, Papua New Guinea, Singapore, and Indonesia. Shares are flat on the announcement.
The company operates in a diverse range of geographies and end markets, shielding it from the full impact of country- or region-contained slowdowns.
Bears
Ongoing investment in research and development is required to remain competitive against larger peers, with product innovation a key differentiation in the decorative paint category.
Nippon Paint is a global paint company with operations in over 50 countries. About two-thirds of sales are in decorative paint, serving mostly residential and some commercial customers. It has the dominant share of the paint markets in China and some smaller Asian countries, as well as Australia. In other regions, it's often one of the three largest players. Its products are distributed via paint and home improvement retailers, with some 300,000 distributors globally. Household brands include Nipsea, Nippon Paint, Dulux (in Asia, the Pacific, and Europe), British Paints, Betek Boya, and Alina, among others. About one-fourth of sales are in industrial coatings and paints. Here, customer groups include manufacturers of automotive and industrial products.