AkzoNobel in Talks to Sell European Business to Secure $25 Billion Merger
Key Facts
AkzoNobel is in early talks with buyers to sell its European vehicle refinish business as it seeks regulatory approval for its merger with Axalta, according to its chief executive. The executive told the Wall Street Journal the company was "in early talks with buyers to sell the European vehicle refinish business." The move is part of the approval process for a deal whose announcement put the combined group's enterprise value at about $25 billion. The remedies package also includes the sale of Axalta's U.S. wood coatings business, Reuters reported, citing AkzoNobel's chief executive. The executive said the two divestments were the only remedies regulators had requested to approve the merger.
The companies' documents describe the transaction as an "all-stock merger of equals," bringing together businesses with combined revenue of about $17 billion in 2024, according to the deal announcement. Under the merger agreement, each Axalta common share will convert at completion into the right to receive 0.6539 AkzoNobel ordinary shares. Axalta shareholders will own 45% of the combined company on a pro forma basis following completion, according to the shareholder disclosure. AkzoNobel shareholders will own 55% of the resulting entity. The companies have chosen "Axanzo" as the name of the combined company, according to a joint statement on the new entity's name.
The companies are targeting about $600 million in annual pre-tax savings once fully implemented following the merger, according to the deal announcement. The announcement attributed the savings primarily to procurement, alongside efficiencies in the combined group's selling, general and administrative expenses. Other sources of savings include optimizing the operations network and supply chain management, among the areas the companies identified for realizing financial benefits from combining their businesses. The companies expected to achieve 90% of the targeted savings within the first 3 years following completion of the merger, according to the announcement. That period will begin when the deal closes, which remains subject to regulatory approvals and customary closing conditions.
Shareholders of both companies approved the merger at their meetings in August, according to the approval announcement published by Axalta. Axalta's merger proposal received support from about 99.97% of votes cast for or against it, according to the voting results disclosure. Abstentions and broker non-votes were excluded from the calculation, according to the same disclosure. The shareholder approvals preceded a formal step in the British scrutiny process, as the Competition and Markets Authority began its merger review on 16 September 2026. The authority set 11 November 2026 as the statutory deadline for its phase one decision, with extensions possible in limited circumstances.
In the background to the deal, AkzoNobel previously rejected a rival cash takeover offer worth €12.5 billion, according to a Reuters report published in May. The offer came from Nippon Paint and Sherwin-Williams, according to the agency's reporting on the rival takeover attempt. AkzoNobel shares rose 20% when the rejection of that offer was disclosed, a move linked to the cash takeover attempt. That rise occurred during the 27 May 2026 session, when news emerged of the rejected bid from the two rivals. The agreed transaction with Axalta, meanwhile, involves an exchange of shares between the companies' shareholders under the terms of the merger agreement.
The next milestones in the approval process fall in November, with Jefferies analysts expecting a European antitrust decision during the month, according to Reuters. In Britain, the scheduled deadline concerns the Competition and Markets Authority's phase one merger review decision. British rules allow the statutory deadline to be extended in limited circumstances, according to the authority's published investigation page. The companies expect to complete the merger in early 2027, according to the statement announcing the combined entity's name. That timing remains subject to all regulatory approvals and the fulfillment of customary closing conditions, they said in the statement.