(49,94 EUR, 0,85%) Nobel announced it has completed the earlier announced sale of its North American Deco Paint business to PPG Industries.
Recall that this transaction was announced mid December 2012. The valuation of the transaction (EV) is $ 1.05bn, including cash proceeds of approximately $ 875m and the transfer of Canadian pension and employee benefit liabilities of about $ 175m.
Akzo’s North American Decorative Paints business had revenue of about $ 1.5bn. The US represents about two third of regional volume, while the remainder is mainly coming from Canada while there also is a small contribution from Puerto Rico.
Our view :
The closing of this transaction was already incorporated in our model. The decision to divest North American Deco Paints was in our opinion the right step. Recall that when Nobel acquired ICI in 2008, it acquired a US Deco Paints business in trouble, given the ongoing crash of the US housing market and weak brand health of the key Glidden brand. has embarked upon a rationalization of the own store network, relaunched the Glidden brand and entered into a distribution agreement with Walmart. The actions taken were probably right steps, but the truth remains that the company lacked scale in its own store network (about 500 POS) vs Sherwin Williams, while its pricing power vs its big customers like (69,67 USD, -0,16%) and Walmart was pretty weak.