AMSTERDAM • Akzo Nobel has agreed to sell its speciality chemicals business to investors led by US private equity firm Carlyle Group for €10.1 billion (S$16.4 billion), including debt - a milestone for the Dutch company as it struggles to recover from a tempestuous 2017.
The sale to Carlyle and Singapore's GIC sovereign wealth fund for a slightly better-than-expected price will allow Akzo to focus on its main paints and coatings business.
It delivers one of the biggest commitments made by Akzo in its defence against a €26 billion takeover offer from rival PPG Industries last year.
It may also help to repair relationships with shareholders unhappy with the rejection of the bid.
Akzo chief executive Thierry Vanlancker, who took charge last July after the bid battle, said he expects €7.5 billion in net proceeds from the sale, and vowed to return the "vast majority" to shareholders.
The deal leaves Akzo as "one of the top three largest paints and coatings companies in the world", Mr Vanlancker said. "We will be looking at size (acquisition) opportunities as they come along, but size is really not top of mind, it is performance of the business."
He said Akzo must now deliver on a goal to achieve a 15 per cent margin on sales by 2020.
Akzo shares rose 3.8 per cent to €77.96 yesterday, still well short of the figure of around €95 in the cash and share offer from PPG.
Analyst Wim Hoste of KBC said the sale price for Specialty Chemicals represented a multiple of 9.8 times core earnings, "which is a bit higher... than we were banking on".
He increased his 12-month target price to €80 a share, "but as the overall upside versus the current share price remains relatively limited, we decided to stick to our 'hold' rating", he said in a note.
Bankers advising potential buyers had said they expected the business to fetch an enterprise value of eight to nine times the unit's expected earnings before interest, tax, depreciation and amortisation.
Carlyle had been vying for the asset with United States private equity firm Apollo and its consortium partner, Dutch fund PGGM, as well as Dutch investor Hal Investments, and Advent International partnered with Bain Capital Private Equity, people familiar with the matter had told Reuters.
The division produces an array of chemicals used in plastic packaging, tissue paper, cleaning materials, pharmaceuticals, food products, salts and adhesives.
Akzo first announced plans to sell the business last April, when PPG was in full pursuit.
Many shareholders were dismayed as Akzo's boards appeared uninterested in talks with PPG and when they ultimately rejected the US company's best offer.
With support from Dutch politicians, Akzo argued that a takeover was not in the interest of other stakeholders, including employees.
Mr Vanlancker said Akzo had extracted promises from Carlyle to keep the chemical company's head offices in the Netherlands, though it made no commitment to retain all of the business' 2,500 employees in the Netherlands.
The deal is subject to regulatory approvals and is expected to be concluded before the year end, Akzo said.