Hello and welcome to your early week international coatings industry update, brought to you by SpecialChem. In industry news since last issue, AkzoNobel announced a review of strategic options for the separation of its Specialty Chemicals business on the heels of an uninvited takeover bid from PPG Industries. Teijin has developed a new hard-coating technology that can be applied evenly on automotive windows and dmg events - Middle East, Asia & Africa has acquired Coatings for Africa. There’s much more where we continue and as always, you can go to the above items now using the links, or checkout our latest stories, which we’ll get to right away…
Perstorp Divests its Additives Business for Coatings
Perstorp has announced the sale of its additives activities primarily serving the paints and coatings industry produced at its facility at Gent Belgium, Perstorp Belgium to Synthomer. The total consideration for the sale is €78 million (subject to certain adjustments). The divestment is in line with Perstorp’s strategy to focus on and expand its core chemicals activities. Perstorp Belgium manufactures and markets a range of performance additives to a global customer base across a number of end-markets including paints and coatings and plastics. The business employs 45 employees at its Gent facility, who will all be transferred with the business.
Univar Enters Distribution Agreement with ANGUS
Univar, a global chemical distributor and provider of value-added services, has announced its entry into a new distribution agreement with ANGUS Chemical Company (“ANGUS”) to include the Paint and Coatings, and Industrial markets in Spain, Portugal, Greece, Turkey, Sweden, Denmark, Norway, with availability in Finland and the Baltics planned for April. This agreement expands on the two companies existing relationship in Italy and is effective January 1, 2017. “We are delighted to expand our existing business in new countries with Angus,” said Nilay Midilli, Industry Director, CASE, Univar EMEA. “Angus’ product range complements our specialty product portfolio. Together we will be growing through new markets and opportunities with Angus products. The addition of such high-valued specialty products is in line with our growth strategies and our specialty focus in the Coatings and Industrial segments.”
Sun Chemical Takes Ownership of RJA Dispersions
Sun Chemical has acquired the assets and business of RJA Dispersions. Based in Hudson, Wis. of the United States, RJA Dispersions is one of the leaders in ultra-fine particle and pigment dispersions for the digital inks market. Primarily used for energy cure (UV), eco-solvent inkjet inks, RJA’s full range of dispersions will join Sun Chemical Performance Pigments’ diverse product lineup. “RJA Dispersions is a technology-based company with an excellent reputation for its innovative, high-quality and cutting-edge specialty dispersions for the rapidly growing digital market,” said Myron Petruch, President of Sun Chemical Performance Pigments and Executive Officer of Sun Chemical’s parent company, DIC Corporation. “This is an excellent bolt-on acquisition for our global pigments business and will immediately expand our product offerings for this growing market segment. This acquisition supports our strategy of continuing to expand our global pigments business into sustainable high growth, high value product lines and markets.”
On Your Coatings Radar: AkzoNobel/PPG Backgrounder
On February 2, 2017 PPG made an offer to acquire AkzoNobel. Akzo later in the week rejected the 22 billion dollar offer, saying that it undervalued the company. PPG’s unsolicited offer comes a few days before a very closely contested Prime Ministerial election on March 15. The biggest issues in that election are, according to an ABC News report, “Dutch EU membership and immigration”, however populist candidate Geert Wilders has made the vulnerability of the biggest Dutch companies to foreign takeover an issue. Current Prime Minister Mark Rutte, who is seeking his third term, has responded by moving his coalition government to the right. Commenting on the Dutch government’s acquisition concerns, the country's Economic Affairs Minister Henk Kamp said the proposed deal was "not in the interest of the Netherlands."
The cash and share offer from PPG was "unsolicited, non-binding and conditional" and worth around 83 euros per share, Akzo said. The bid represented a 29 percent premium to Akzo's closing price of 64.42 euros on Wednesday and its shares almost 15 percent to 73.95 euros on Thursday, nearing all-time highs.
PPG holds roughly 12 percent of the overall coatings market and Akzo another 9 percent, however large areas of overlap exist in the automotive refinish coatings and decorative paint markets.
Like many companies in the Netherlands, Akzo Nobel has strong defenses in place against a hostile takeover. Members of its supervisory board hold "priority shares" granting them the right to make binding nominations to the management board or amend the company's articles of incorporation.
Although Ton Büchner, AkzoNobel’s CEO said that Akzo decided prior to the offer to look into separating its Specialty Chemicals business, they bought it forward after receiving the offer, presumably to make the company less attractive to uninvited bids.
Industry insiders say that the specialty business could be sold for around 9 times 2016 EBITDA of 953 million euros, or around 8.6 billion euros. Such a transaction would also have the benefit of the re-rating of the rest of Akzo's businesses.
Akzo's specialty chemicals business makes ingredients used in industrial processes and products, including polymers, salt and chloralkali used for making a wide range consumer goods and building materials.
Het Financieele Dagblad, a financial paper based in Amsterdam, cited an unidentified PPG official who said PPG was preparing a second offer. However, company spokesman Bryan Iams at PPG had no further details beyond its statement on March 9 that the company was evaluating and considering its position after Akzo rejected its offer.
If the proposed transaction goes beyond this point, however, any deal would still have to overcome antitrust concerns in Europe and the backlash from the growing nationalist sentiment in the Netherlands.
We have reproduced both company’s statements below.
PPG Confirms Proposal for AkzoNobel
PPG today (March 9, 2017) confirmed that it made an attractive and comprehensive proposal to Akzo Nobel N.V. on March 2, 2017, inviting AkzoNobel to enter into negotiations with PPG on a potential transaction to form a combined company, which AkzoNobel rejected.
PPG continues to believe there is a strong strategic rationale for the proposed transaction between PPG and AkzoNobel and will carefully evaluate and consider its position and path forward related to its proposal.
Michael McGarry, chairman and CEO of PPG, said, “PPG has long admired AkzoNobel’s businesses, global presence, culture and principles as well as its advances in innovative product development and sustainable business practices. We believe a combination of our two companies is a very compelling strategic opportunity. We are confident that this combination is in the best interests of the stakeholders of both companies as it presents a unique opportunity to build on the successful legacies of our businesses. PPG has carefully considered the interest of all AkzoNobel stakeholders including shareholders, employees, customers and the communities it serves and has proposed its willingness to enter into serious commitments in respect of all stakeholders.”
Strategically, the combination of PPG and AkzoNobel would deliver an enhanced global player in paints, coatings and specialty materials, combining complementary products, technologies and geographies, and would create a stronger competitor in a highly competitive global marketplace, offering a broader line of products and technologies cost-effectively to a more diverse customer base. Financially, the combination would create a stronger enterprise with a solid investment grade rating.
PPG envisions that the heritage of AkzoNobel’s culture and best practices will be reflected in the composition of the combined company, and in the locations where it would operate. The combination would continue the legacies of both companies, including the use of flagship brands and technologies, investment in research, development and innovation, and the companies’ longstanding commitment to being good employers and corporate citizens that operate in a sustainable and socially responsible manner.
PPG, in conjunction with its financial and legal advisors, has devoted significant time and resources to analyzing a potential combination of PPG and AkzoNobel and is confident in its ability to execute and complete the proposed transaction and to obtain all necessary regulatory approvals.
AkzoNobel Reviewing Options to Separate Specialty Chemicals
AkzoNobel on Thursday announced a review of strategic options for the separation of its Specialty Chemicals business.
The Specialty Chemicals business, which had revenues of €4.8 billion in 2016, is strongly positioned with a broad portfolio of leading technologies and chemicals which service a wide range of end-user segments including construction, industrial and consumer goods. The separation will allow the Specialty Chemicals business to continue to build and accelerate its market-leading positions across a range of market segments.
As part of the separation, AkzoNobel will consider various alternative ownership structures for the Specialty Chemicals business including, but not limited to, the establishment of an independent listed entity. The ultimate structure will be determined by reference to shareholder value maximization as well as broader stakeholder considerations.
Today’s decision was brought forward following confirmation that AkzoNobel has rejected an unsolicited, non-binding and conditional proposal from PPG Industries Inc. for all of the issued and outstanding ordinary shares in the capital of AkzoNobel. PPG’s proposal substantially undervalues AkzoNobel and is not in the interest of its stakeholders, including its shareholders, customers and employees.
Ton Büchner, CEO, AkzoNobel said, “Our Specialty Chemicals business is an industry leader in many of the markets in which it operates and we are extremely proud of its heritage, performance and people. We are reviewing strategic options to separate it from the company to create focus for both Specialty Chemicals and the Decorative Paints and Performance Coatings group, allowing them to build further on their respective leadership positions.
“As stated at our full-year results announcement in February, we are now a leaner, more agile company with a solid financial and operational foundation and a focus on growth. AkzoNobel has enjoyed a record performance in recent years in terms of profitability and has made significant strategic progress, allowing us to take this decision.
“Our decision today was brought forward due to recent events. The unsolicited proposal we received from PPG substantially undervalues our company and contains serious risks and uncertainties. The proposal is not in the interest of AkzoNobel’s stakeholders, including its shareholders, customers and employees, and we have unanimously rejected it. Along with my colleagues on our Boards, our executive team and our thousands of employees, I firmly believe that AkzoNobel is best placed to unlock the value within our company ourselves.
“We understand our role in society and want to protect our ability to continue to invest in communities, research and development, innovation and sustainability in the countries in which we operate.”
AkzoNobel confirmed it received an unsolicited, non-binding and conditional proposal from PPG for a public offer on all of the issued and outstanding ordinary shares in the capital of AkzoNobel at a price of €54.00 in cash and 0.3 PPG shares per AkzoNobel share, corresponding to a value of €83.00 per share as per 28 February, 2017 (cum final dividend 2016).
The Board of Management and Supervisory Board of AkzoNobel have carefully reviewed and considered the proposal by PPG, together with their financial and legal advisors. In doing so, the Boards have taken into account the long-term interests of all AkzoNobel stakeholders, including the shareholders.
The Boards have unanimously concluded that the PPG proposal substantially undervalues AkzoNobel by failing to reflect the long-term value creation potential of the company. The Boards have also concluded that the equity component of the proposal has significant issues, including the high leverage of the proposed combination. They also believe the proposal carries significant delivery and timing risk for shareholders, both in relation to substantial anti-trust issues, pension schemes and the achievability of proposed synergies.
The Board of Management and the Supervisory Board of AkzoNobel also believe the proposal is not in the interest of stakeholders including its customers and employees. The proposal would be detrimental to the societies and economies in which AkzoNobel operates, including potentially jeopardizing the company’s major contribution to communities and research & development organizations globally and its deep commitment to sustainability. The proposal is not in the interests of AkzoNobel employees and would create potential uncertainty for thousands of jobs worldwide.
AkzoNobel did not initiate nor has it encouraged or entertained any conversations with PPG on this matter.
New York PaintCare® Bill Passed by Senate Environmental Committee
On Feb. 14, The New York Senate Environmental Conservation Committee approved legislation that would establish the PaintCare® program in that state, if enacted. The Senate bill, S. 881, which is sponsored by Sen. Tom O’Mara (R,C,I-Big Flats), would mandate the industry-sponsored paint stewardship program and reduce a costly burden on local governments that are currently responsible for collecting and disposing of most post-consumer, unused paint.
In New York, the legislation has received strong support on the Senate side over the past two years — it received unanimous Senate approval in 2016; but a companion bill in the Assembly, A. 1038, sponsored by Assemblyman Al Stirpe (D-Syracuse) has not fared as well. That bill is currently awaiting action by the Assembly’s Environmental Conservation Committee.
Since 2008, Oregon, California, Connecticut, Rhode Island, Vermont, Minnesota, Maine, Colorado, and the District of Columbia have enacted the ACA- and industry-conceived platform for the proper and effective management of post-consumer paint.
O’Mara, who chairs the Senate Environmental Conservation Committee, said that the legislation would create local jobs, provide relief to local property taxpayers, and encourage environmentally sound recycling and disposal of unused paint in New York State. He pointed to the initiative as an example of how government and industry can work together to implement effective environmental policies and programs.
“This legislation exemplifies how much we can accomplish by working together with industry on important environmental concerns. Seeking common ground and cooperation, rather than government cramming unreasonable demands down the throat of industry, can help give New York State a more business-friendly environment and actually result in better, more workable laws,” O’Mara said. “Working together can go a long way on reaching an end result on other important issues that would benefit our state fiscally, economically and environmentally. The Assembly Democratic leadership should take action this session.”
The Product Stewardship Institute has estimated that approximately 3.1 million gallons of paint go unused each year in New York State — with the costs of collecting and managing the paint’s disposal mostly falling on local governments. According to Sen. O’Mara, the legislation, through which paint manufacturers would be responsible for managing the recycling and disposal of unused paint, would save local governments approximately $25 million annually.
ACA and its industry are committed to finding a viable solution to the issue of post-consumer paint, which is often the number one product, by volume and cost, coming into Hazardous Household Waste (HHW) programs. PaintCare has had resounding success in the eight states in which program operations have been implemented. To date, the program has collected 16 million gallons of paint.
dmg events - Middle East, Asia & Africa Takes Over Coatings for Africa
Coatings for Africa will now be organized by dmg events, starting with the next edition in Johannesburg from May 29 – 31, 2018. The new acquisition will sit within the company’s growing Coatings portfolio, which includes the Middle East Coatings Show taking place in Dubai on March 13 -15, 2017.
The biennial Coatings for Africa event will retain the South African Paint Manufacturers Association (SAPMA) and the Oil and Colour Chemists Association (OCCA) as partners, with both associations pledging their long-term support.
SAPMA members make more than 90 percent of all coatings manufactured in South Africa, while many of the individual chemists and technologists who visit the event are OCCA members.
“Africa is one of the most exciting and rapidly developing continents on earth,” said Ian Faux, Vice President – Coatings. “As well as supporting the local markets, we are confident that our international client base, familiar with our events in Asia and the Middle East, will be keen to move with us into this new territory and take advantage of the fabulous opportunities available here.”
The event will see senior managers and technologists from across the paints and coatings industry come looking for a mix of the latest products, technologies and services. At the same time, they will be able to take part in a developing education program, which will include a three-day conference, plus interactive zones for workshops and live product demonstrations.
Deryck Spence, speaking on behalf of SAPMA and OCCA stated “Both of our associations are extremely excited about our partnership with dmg events. It is a perfect marriage in that we share the vision of uplifting Coatings for Africa as the flagship shows on the African continent and in doing so expand the expertise of the Coatings industry in South Africa, which we represent.”
Coatings for Africa joins a coatings-specific portfolio of events that already includes Dubai’s Middle East Coatings Show, the Asia Coatings Congress, the East African Coatings Congress, the Central Asia Coatings Show, the Asia Pacific Coatings Show and Cairo’s Middle East Coatings Show. The established event also joins an expanding portfolio of exhibitions being created for the African market by dmg events’ recently opened South African operation, set up in July of 2016.
“The acquisition of Coatings for Africa is the latest in a series of strategic moves by dmg events as we expand our business into key markets on the continent,” said Matt Denton, President of dmg events. “We have already successfully launched The Big 5 East Africa and INDEX North Africa, while a third geo-cloned event - The Big 5 Construct North Africa - will debut in April 2017.”
PPG Announces Automotive and Industrial Coatings Price Increases in Asia
PPG today announced that it will implement customer-specific price increases and surcharges in Asia to offset a significant rise in raw material costs. The price changes will impact a select group of automotive OEM (original equipment manufacturer) coatings and industrial coatings products, effective April 1 or as contracts permit.
“The coatings industry in Asia is currently experiencing a dramatic tightening of commodity supply, stemming from increased environmental regulations and controls, supplier capacity constraints, and regional availability of feedstocks,” said Tim Knavish, PPG senior vice president, automotive OEM coatings.
“While we must work with our customers to share the burden of these cost increases, we remain committed to providing them with global coatings solutions that offer outstanding value, world-class service and the latest technologies,” said Shelley Bausch, PPG vice president, global industrial coatings.
Details of the price increases will be communicated directly to customers.
Asian Paints Starts Selling Ultima Protek in Nepal
Asian Paints Nepal has started offering Apex Ultima Protek in Nepal. Issuing a statement, the company said the paint helps keep outer walls of houses attractive for years.
The Apex Ultima Protek has a Teflon surface-protector which makes the paint more hard and resilient. According to the company, the paint helps protect exterior surfaces even in unfavorable climate.
Axalta Coating Systems Protects Façade of Turkmenistan’s New Airport
Axalta Coating Systems has provided its Alesta® SD or Super Durable line of powder coatings for the façade of Central Asia’s largest airport, the new Ashgabat International Airport. Alesta SD has been specifically developed to provide better color and gloss stability, making it ideal for commercial building projects such as this, in addition to high-end residential projects.
Ashgabat International Airport, one of Turkmenistan’s most prestigious infrastructure projects, required a façade coating that would be extremely resistant to weather degradation and that would provide lasting gloss and color retention.
Willi Müsgen, Managing Director of Köln-Color, the company in Cologne, Germany, who handled the coating of the airport’s striking 32,000m2 falcon-shaped façade, explains: “As the metal fabricator wanted RAL 9016 HFW Matt Traffic White for the huge shape, we chose Axalta’s Alesta SD Matt RAL 9016 knowing it would meet all the requirements. We work with Alesta SD powder coatings very frequently, so we know how the product behaves.”
Köln-Color received sections of the façade between October 2015 and June 2016 from international façade specialist Christian Pohl GmbH, also based in Cologne, Germany. Once coated in Alesta SD, the panels made of 3mm aluminum were shipped to Ashgabat in sections for assembly.
Olaf Duisberg, Architectural Powder Coatings Key Account Manager for Axalta in Germany, adds, “We are delighted to have worked with Christian Pohl and Köln-Color again to realize the architect’s vision for this stunning project. Our Alesta SD range is designed for buildings that are exposed to direct sunlight, as it is extremely weather resistant, so it was an ideal choice for the Ashgabat International Airport, helping to keep it looking good for years to come.”
Thorsten Evenkamp, Vice President and Head of Sales of Christian Pohl GmbH, says, “This was a very important project for us. We had to make sure every aspect of the façade fabrication met the exacting standards and performed at the highest level. We’ve also worked closely with Axalta for a number of years, so we were pleased to know our work would be protected by, and made to look even better with, Alesta SD powder coating.”
The international airport project, which is valued at an estimated US$2.3 billion, encompasses 30 buildings on a 350,000m2 site just outside the capital, Ashgabat. It includes two passenger terminals, and will be able to serve more than 17 million passengers and handle more than 200,000 tonnes of cargo a year.
The SD or Super Durable designation is one of three widely-used durability levels in the powder coatings industry. Alesta AP or Architectural Polyester powder coatings are suitable for residential or smaller projects in normal climate conditions. Alesta SD powders provide better color and gloss stability, ideal for high-end residential and commercial buildings. And finally, Alesta UD are ultra durable powder coatings designed for prestigious buildings or for regions with high levels of UV radiation.
Firestone Building Materials to Acquire Gaco Western
Firestone Building Products Company, LLC announced recently that it has reached a definitive agreement to acquire Gaco Western (“Gaco”), a leader in innovative liquid silicone roofing systems and provider of top-tier waterproofing and spray foam insulation solutions for a variety of commercial, and residential applications. The acquisition strengthens Firestone’s industry leadership in commercial roofing and offers positions in residential and commercial building products, reinforcing its commitment to be a leader in the building envelope solution. Firestone Building Products is part of Bridgestone Americas.
“This acquisition supports our strategic plan to penetrate high-growth adjacent product segments,” said Tim Dunn, president of Firestone Building Products. “Adding Gaco’s product portfolio will expand our offering, broaden our customer base, and reaffirm our commitment to being a total solutions provider. We are now also in a position to better capitalize on rapidly growing demand for liquid coating products and are excited about the opportunity to unearth the long-term value that exists in the combination of the two businesses.”
Financial details of the transaction are not being disclosed. The acquisition is expected to be completed before the end of the first quarter 2017, subject to regulatory approvals and other customary closing conditions.
Founded in 1955, Gaco is privately-owned and headquartered in Seattle, Washington. With brands including GacoFlex, GacoRoofFoam and GacoWallFoam, the Company produces silicone polyurethanes, epoxies and acrylic liquid coatings for roofs; decking and waterproofing products that protect pedestrian surfaces, concrete, metal and plywood; and open- and closed-cell foam products, which protect and insulate buildings. All Gaco products are made at its state-of-the-art manufacturing, research and development facility in Waukesha, Wisconsin, USA.
The combination will allow Firestone to provide customers with additional flexible and cost-effective products for their roofing needs. By delivering a high-quality repair product at a competitive price point, Gaco’s portfolio of silicone and acrylic liquid coatings offers an alternative for situations when full roof tear-off and rebuild are not an available solution. For contractors, these products allow for easier and less labor-intensive installation, significantly reducing costs. Additionally, the transaction enables Firestone to offer its customers access to Gaco’s unparalleled waterproofing solutions.
“With over 60 years’ experience providing high quality products to our customers, we have successfully built a leading position in the silicone roofing and waterproofing segments,” said Peter Davis, Gaco Chairman and CEO. “Firestone is the clear leader within the roofing industry and has a strong vision for the broader building envelope – combining best-in-class service, product, and innovation, with a substantial distribution platform. We are excited at the prospects of joining Firestone as it allows us to continue to drive R&D, deliver innovative products to our customers, and offer additional career opportunities to our employees.”
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