AkzoNobel Shares Plummet 19% After Nippon Paint and Sherwin-Williams Drop Takeover Bid

Shares of AkzoNobel took a steep hit, dropping nearly 19% early Wednesday after Nippon Paint and Sherwin-Williams called off their combined bid to acquire the Dutch paint giant. The news came soon after AkzoNobel rebuffed last week's €12.5 billion ($14.5 billion) all-cash proposal, citing concerns it undervalued the company and risked splitting its operations.

The bid would have resulted in Nippon Paint holding onto AkzoNobel's decorative and industrial paints, while Sherwin-Williams received the automotive, marine, and powder coatings units. AkzoNobel's management described the offer as insufficient, also pointing out uncertainties on the regulatory front.

According to analysts at Barclays, led by Katie Richards, the rejected €73-per-share offer was modest compared to previous valuations. However, it did shake up market perceptions regarding AkzoNobel's attractiveness as a takeover target.

This isn't the first time AkzoNobel has turned down a major offer. Back in 2017, the company declined a bid from PPG Industries under similar circumstances.

On the same day, AkzoNobel reaffirmed its commitment to an ongoing merger plan with US-based coatings maker Axalta. Both firms' boards gave unanimous backing, and a shareholder vote is scheduled for early July, with completion expected by late 2026 or early 2027.

The combined enterprise is projected to reach a valuation around $25 billion, and will be led by current AkzoNobel CEO Greg Poux-Guillaume. The merger is also anticipated to deliver annual cost savings in the region of $600 million, predominantly realized within three years.

Barclays highlighted that if the synergy targets from the Axalta tie-up are fully achieved, the upside could outperform the recently withdrawn offer. This ongoing deal, therefore, frames the valuation debate in a new light and suggests different routes for growth and consolidation in the coatings sector.

With all eyes on the upcoming shareholder vote and regulatory approvals, the fate of AkzoNobel's strategic path remains a critical topic for those tracking European industrial plays this year.