Saturday, December 22, 2012

Akzo Nobel bids for the whole of Courtaulds (1998)

Akzo Nobel last week confirmed it had made a play for UK coatings and fibres company Courtaulds. The Dutch group issued a statement which said that it was 'in talks with Courtaulds that may or may not lead to a cash offer' of an anticipated 450p/share, worth £1.8bn ($2.8bn).  The bid from Akzo Nobel, expected after Easter, provides Courtaulds with an alternative to its split plans.
Should the deal go through it would make Akzo Nobel - currently number three - the global leader in the paints and coatings league. Akzo Nobel said that post acquisition it would look at options for spinning off the combined fibres business which may include a demerger.
London analysts were generally positive towards the Akzo Nobel move saying it would create greater shareholder value for Courtaulds, but agreed that finding a buyer for the fibres business would prove tricky. Peter Mackey at Dresdner Kleinwort Benson said: 'Just putting the two together makes a bigger poorly operating business.'
But while both companies are involved in viscose production, it is the coatings
end that is expected to provide regulatory hurdles. Both companies produce architectural paints, powder and plastic packaging coatings - some of which may need to be divested were the deal to go through.
Courtaulds specialises in heavy duty marine, protective and aerospace coatings along with industrial powder and packaging, coil coatings and architectural paint. Akzo Nobel is a leader in decorative coatings and car refinishes, industrial products and resins.
However, analysts remain sceptical as to why Akzo Nobel has bid for the full Courtaulds package now, when it would have been much cheaper two months ago.
One insider however thought the Akzo Nobel move on Courtaulds was an attempt to address the oversupplied and lacklustre fibres market. By combining the two fibres arms Akzo Nobel could tackle the fibres problem.
Courtaulds' share price, at 465p after the Akzo Nobel announcement, has doubled in the past two months.

13 April 1998 [Source: ICB]

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