JSW Paints, Indigo Paints Lead Race for Akzo Nobel's India Business Post

JSW Paints, Backed By TPG, And Indigo Paints, Supported By Private Equity Firm Advent International, have emerged as the leading contenders for the Indian operations of Dutch paint manufacturer Akzo Nobel, following a high-level meeting last week. Pidilite Industries is in a distant third position, while private equity firm Blackstone has withdrawn from the bidding process, according to sources familiar with the situation.

Binding bids from all three companies are anticipated by the end of April or in the penultimate week of the month. Akzo Nobel, known for its Dulux brand, holds a 10% share of the Indian paint market, ranking fourth behind Asian Paints and Berger Paints, which together command over 75%, along with Kansai Nerolac.

Last year, Akzo Nobel initiated a strategic review of its profitable Indian unit, putting its decorative paints, industrial coatings, and related manufacturing assets up for sale. This decision reflects Akzo's intention to refocus its resources amid fierce competition in India's $8 billion paint industry.

During a recent visit to India, AkzoNobel NV’s CEO, Grégoire Poux-Guillaume, met with representatives from JSW Paints, Indigo Paints, and Pidilite. A source close to the discussions indicated that they were productive, with final offers expected within one to two weeks. Akzo Nobel declined to comment, and inquiries to JSW Paints and Indigo Paints went unanswered.

The sale includes the decorative paints and industrial coatings business, along with related manufacturing assets. The Indian unit, listed on Indian stock exchanges with a market capitalization of Rs 16,000 crore, represents a significant opportunity. Earlier this year, Akzo Nobel acquired the intellectual property rights for the Dulux brand in India, Nepal, Bhutan, and Bangladesh for Rs 1,152 crore, while simultaneously selling its powder coatings business to its parent company for Rs 2,073 crore and its R&D division for Rs 70 crore. The net proceeds of Rs 991 crore will be used to cover tax obligations from these sales and fund dividends to shareholders.

Akzo Nobel's global operations, headquartered in Amsterdam, have a market capitalization of €7.95 billion. JSW Paints, an early contender, has partnered with TPG to submit non-binding bids and is preparing a revised offer. Indigo Paints, a more recent entrant, has teamed up with Advent International to strengthen its position and is now a key player in the bidding process.

Pidilite, known for its adhesives and sealants, also expressed initial interest and submitted non-binding bids, but has not confirmed plans for a binding offer. Blackstone, which had valued Akzo's India business at $1.2 billion and submitted non-binding bids, has opted out of recent discussions, indicating its exit from the race.

For both JSW and Indigo, acquiring Akzo's assets could enhance their scale and brand portfolio. JSW Paints, launched in 2019, aims to compete with industry leaders, while Indigo, a rapidly growing player, seeks to expand its market presence. Pidilite's interest, although less certain, suggests a potential move into the decorative paints sector.