Mergers and acquisitions: Who bought whom?

	Buyer	Country	Target	Country	Segment	Remarks
Paints and coatings
	Akzo Nobel	The Netherlands	V.Powdertech Co., Ltd.	Thailand	Powder coatings
	Akzo Nobel	The Netherlands	Fabryo	Romania	Architectural coatings
	Alpina Farben GmbH	Germany	Alfred Clouth Lackfabrik	Germany	Wood coatings	Alpina takes over the distribution of Clou's DIY business
	Hempel	Denmark	J.W. Ostendorf	Germany	Architectural coatings	Hempel purchase 65 % of the German based Paint manufacturer, J. W. Ostendorf.
	Siegwerk	Germany	Tupahue Tintas	Brazil	Printing inks, coatings and solvents for flexo and gravure printing
	Zorka Color	Serbia	Tikkurila	Serbia	Architectural coatings	Tikkurila sells local site to local partner
	Zorka Color	Republic of Macedonia	Tikkurila	Republic of Macedonia	Architectural coatings	Tikkurila sells local site to local partner
Raw materials
	Alberdingk Boley	Germany	Synthomer Leuna GmbH	Germany	Binders
	Astorg	France	IGM Resins	The Netherlands	Binders
	Carlyle Group and GIC	USA / Singapore	Akzo Nobel Speciality Chemicals	The Netherlands	Diverse raw materials
	Dominion Colour Corporation	Canada	Gemini Dispersions	United Kingdom	Dispersions	DCC merges Gemini Dispersions Ltd into parent organization
	Kolb Distribution	Switzerland	Elementis Specialties Netherlands	The Netherlands	Diverse raw materials
	Protech/Oxyplast	Canada	Chemionics Corporation	USA	Specialty plastisol and latex formulations
	Sabic	Saudi-Arabien	Clariant	Switzerland	Diverse raw materials	Sabic acquires 25 % of the shares in Clariant
	Synthomer	United Kingdom	BASF (local site)	Austria	Styrene-butadiene-based paper dispersions	Synthomer divests local production site
	Vink Chemicals	Germany	Prom Chem (biocides business)	United Kingdom	Biocides
Adhesives
	H.B. Fuller	USA	Royal Adhesives & Sealants	USA	Adhesives
Construction chemicals
	Sika	Switzerland	Emseal Joint Systems	USA	Structural expansion joint products, adhesives and sealants
Distribution
	PPG	USA	ProCoatings	The Netherlands	Architectural coatings
	Safic-Alcan UK	United Kingdom	Techform Fine Chemicals	United Kingdom	Diverse raw materials
	Uzin Utz	Germany	Forinn bv	The Netherlands	Flooring systems
	Uzin Utz	Germany	Bosgoed Groothandel bv	The Netherlands	Flooring systems
Testing and measuring
	Anton Paar	Germany	Quantachrome Instruments	USA	Measuring equipment

Interview: “Without a doubt we will continue to see a significant number of bolt-on, safer acquisitions”

Grace Matthews offers transaction advisory services for manufacturers and distributors throughout the chemical and materials value chain. European Coatings spoke to managing director, Ben Scharff, about the recent level of activity regarding mergers and acquisitions (M&A) in the paint and coatings industry and his expectations for the rest of the year.

After the first six months in 2018, how do you rate the M&A activities in the paint and coatings sector in this year compared to last year?

Ben Scharff: Based on our internal tracking metrics, we see roughly the same level of activity in announced paints and coatings activity through the first five months of 2018 as we did for the same time period last year (36 vs. 34). Moving upstream though we have seen a marked increase in the number of announced resin and polymer transactions versus the prior year (38 in 2018 vs. 22 in the first 5 months of 2017). We anticipate that activity will remain strong for the balance of 2018 as most companies continue to perform well and valuations remain buoyed by the significant amount of capital available from both strategic and private equity to pursue transactions.

What development do you expect for the next six to 12 months regarding M&A activities in the paint and coatings sector, will there be more activity or has the situation cooled off?

Scharff: While we anticipate the number of transactions to remain fairly constant, we expect that they will occur at the large and small ends of the market. Due to the heavy and continuous consolidation in paint and coatings, we are starting to see a void emerge in the existence of middle market coatings manufacturers. Those between $50M and $500M are becoming less common. We see private equity chipping away at this and attempting to fill this void by executing on buy and build strategies with smaller, mainly industrial coatings companies.

The last mega deal was between Sherwin-Williams and Valspar. Do you expect any further deals of that scale or is it more likely to see more of the types of recent years such as bolt-on acquisitions?

Ben Scharff

Managing director, Grace Matthews

Scharff: Without a doubt we will continue to see a significant number of bolt-on, safer acquisitions. Companies will do this to expand geographical presence, add technology or key customers, or even to onboard a new channel to market strategy. While these deals occur, there will continue to be chatter in the market regarding PPG, Akzo, Axalta, RPM and some of the large Asian coatings manufacturers. We expect that over the next 12-24 months we will see some combination of these companies. All are publicly traded, and all have extreme pressure to grow beyond the GDP growth rates of their respective end markets.

To what extent will private equity firms play a bigger role in M&A activities in the paint and coatings industry?

Scharff: We continue to see increasingly strong interest from private equity across the paint coatings value chain. In the past year, we have seen raw material suppliers, coatings manufacturers as well as distributors serving this space. In each instance we have witnessed private equity being very aggressive regarding timing, terms and valuation. Paint and coatings remains an attractive end market to execute a roll-up strategy. As such, we will continue to see private equity aggressively participate in this sector.

The complete article can be found in the July/August issue of the European Coatings Journal, which is also available online in European Coatings 360°.