Carlyle Group swoops for AkzoNobel

AkzoNobel has announced the sale of 100% of its Specialty Chemicals business to The Carlyle Group and GIC for €10.1bn.

The deal, expected to be completed by the end of 2018, will realise AkzoNobel’s strategy of creating two separate businesses – Paints and Coatings and Speciality Chemicals.

The private sale has been agreed by its board of management and the supervisory board, which agreed the deal was in the best interests of AkzoNobel, Specialty Chemicals and its respective stakeholders, including employees, shareholders and customers.

Thierry Vanlancker, CEO AkzoNobel, said, ‘Today is a key milestone in creating two focused, high performing businesses, to generate value for all stakeholders. We delivered on our commitment to separate the Specialty Chemicals business and did so ahead of schedule.

‘We are very pleased to announce the sale of Specialty Chemicals to The Carlyle Group and GIC. We believe the business is well positioned to capture growth opportunities and further improve performance. Carlyle has significant experience in the chemicals industry and a proven track record when it comes to health, safety, innovation and sustainability.’

The Carlyle Group has extensive experience unlocking long-term potential and creating value in its portfolio companies. In 2013 it bought Axalta amidst criticism that it had significantly overpaid. However, just three years later it recorded its second-biggest profit on a deal when it sold its stake in the paint company for $5.8bn, $4.5bn more than it originally invested.

Martin Sumner and Zeina Bain, managing directors at The Carlyle Group, said, ‘We are pleased to invest in the Specialty Chemicals business and proud to support a business with such a strong heritage. We are committed to growing the business, and building upon its innovation capability, high quality work force and asset base, as well as its world-class sustainability and environmental practices. We look forward to working with the management team to transition the business to a successful independent company.’

The deal comes after a lot of near misses in 2017. PPG tried and failed to acquire AkzoNobel, AkzoNobel and Axalta then discussed a merger, before Nippon ended those talks by making a bid for Axalta.

Werner Fuhrmann, CEO of AkzoNobel Specialty Chemicals, said, ‘Specialty Chemicals is a strong and profitable business with highly skilled and motivated employees serving our customers every day with essential chemistry. As a focused chemicals company we will concentrate our efforts and resources to accelerate profitable growth.

‘With this transaction, our business has an opportunity to achieve its full potential and we will continue to fulfil the current and future needs of our customers throughout the world.’

The transaction values Specialty Chemicals at €10.1bn. AkzoNobel expects to receive a cash payment of €8.9bn, with net proceeds expected to be around €7.5bb.