AkzoNobel-Axalta $25 Billion Merger Faces Deeper UK Probe
Key Facts
The UK Competition and Markets Authority said on November 11 that the merger of AkzoNobel and Axalta could lead to a substantial lessening of competition in one or more markets in the UK. The CMA decided to refer the deal for a Phase 2 investigation unless the companies offer an acceptable undertaking to address its concerns. Those concerns focus on the supply of vehicle refinish coatings, where the CMA found the companies to be close competitors. The CMA said the parties have until November 18 to submit an alternative undertaking that it may accept. The UK process therefore remains open to a remedy before the deeper investigation begins, while referral remains the planned course if the undertaking is not accepted.
The CMA identified unilateral horizontal effects in the automotive refinish coatings market, saying AkzoNobel and Axalta offer similar products and closely overlapping product ranges. It also said the companies provide technical support and have extensive approvals from vehicle manufacturers and insurers, reinforcing their proximity as competitors in the UK market. The CMA estimated that the merged entity would become the clear market leader, with a combined supply share of between 40% and 50%. It said the change could leave customers facing higher prices, lower quality or weaker technical support. The assessment puts competition in a specific sector at the center of the CMA's decision, rather than treating all coating activities covered by the deal equally.
The CMA's review drew on documents submitted by the companies and bid data, as well as information from customers and competitors. It also collected competitors' sales data to reconstruct market shares, a step that produced its estimate of the new entity's combined share. The scope of the decision shows that the CMA distinguished between different product markets when assessing the merger's impact. In thermoset powder coatings in the UK and European Economic Area, it found no significant competition concerns. It attributed this to the number of suppliers, which allows customers to spread their requirements and reallocate purchases among existing competitors.
The CMA began its merger review on September 16, after inviting interested parties to submit initial views between April 16 and May 1. The Phase 1 decision follows that process, which gathered market views and relevant commercial data. In Europe, the European Commission granted conditional approval for the deal on November 6. AkzoNobel said the remedy agreed with the Commission includes the sale of its European vehicle refinish coatings business, and that the commitments remove the horizontal overlap between the parties' activities in the European Economic Area, the UK and Switzerland. The differing processes show that the Commission's approval does not end the UK CMA's review, which is still awaiting an undertaking it may adopt to address its own concerns.
AkzoNobel described the Commission's approval as an "important milestone" as the merger approaches completion, and Chief Executive Greg Poux-Guillaume said the company was moving toward closing the deal. The company had expected to close in early 2027, subject to outstanding regulatory approvals. AkzoNobel describes the agreement as an all-stock merger of equals combining businesses with revenue of about $17 billion and an enterprise value of $25 billion, based on the deal announcement. Under the announced exchange terms, Axalta shareholders will receive 0.6539 AkzoNobel shares for each share they own. Immediately after closing, AkzoNobel shareholders are due to own 55% of the group and Axalta shareholders 45%.
Closing data on November 10 showed AkzoNobel shares, listed under the ticker AKZOY, falling to $23.81 from $23.88 in the previous session. Axalta shares, listed under the ticker AXTA, also closed at $37.38, compared with $37.53 on November 9. These prices precede the UK CMA's announcement on November 11, so they reflect trading in the session before the decision. The next step in the UK process remains tied to the November 18 deadline for submitting an undertaking. If the companies do not submit an undertaking the CMA accepts, the deal will be referred for a Phase 2 investigation, while the targeted early 2027 closing remains subject to completing regulatory approvals.