Nippon Paint to acquire Cromology, France's fourth largest decorative paint maker, for 1.152 billion euros

On October 20, 2021, Nippon Paint Holdings Limited (NPHD) announced that its consolidated subsidiary Dulux Group Limited (DuluxGroup) has undertaken to acquire the share capital of Cromology Holding SAS (Cromology) and its subsidiaries, making it an indirect A subsidiary of Bang Coatings Holdings Co.
,
Ltd.

Nippon Paint said the equity acquisition will be carried out through DGL International (UK) Ltd, a new British company established by its holding company, Dulux Group
.
Cromology is engaged in the manufacture and sale of decorative paints and other paint-related products in Europe
.
Dulux Group, through its subsidiary Winvest International SCS FIAR, has entered into a put option agreement with Cromology's major shareholder (Wendel Group), under which Dulux Group undertakes to acquire Cromology
.

The board of directors of Nippon Paint Holdings Co.
, Ltd.
decided at a meeting held on October 13, 2021, to delegate the decision to sign the put option agreement (with the draft share purchase agreement) to the representative executive officer and co-president
.
Given that all conditions have been met, it was decided to enter into the agreement on October 20, 2021, and the transaction will be completed in the first half of 2022, subject to customary regulatory approvals
.

This marks that Nippon Paint will acquire Cromology Holding SAS (Cromology), the fourth largest decorative paint manufacturer in France, from Wendel Group
.
It is reported that Nippon Paint will pay 1.
152 billion euros (about 1.
3 billion US dollars) for the acquisition of Cromology
.

Cromology is the fourth largest manufacturer of decorative coatings in Europe.
As a leader in the architectural coatings market, Cromology has a broad market in Europe and a high market share.
It ranks among the top three in France, Italy, Spain and Portugal.
It is designed for professionals and consumers, Manufacture, sale and distribution of a wide range of decorative coatings and products
.
The European coatings market is the second largest market in the world after China, with stable growth prospects
.

According to the 2021 Europe's 25 Largest Coating Manufacturers list published by European Coatings Magazine, Cromology's 2020 sales are 440 million euros, ranking ninth on the list, with a year-on-year revenue of 415 million in 2019.
Euro, up 6%
.
However, according to data disclosed by Nippon Paint, Cromology’s net sales in 2020 were 628 million euros
.

Regarding the reasons for acquiring Cromology shares, Nippon Paint stated that Nippon Paint Group regards maximizing shareholder value as its ultimate goal
.
To achieve this, Nippon Paint's new mid-term plan sets goals to achieve revenue growth that exceeds market growth in the operating regions through a growth strategy based on strong partnerships between the group's partner companies and businesses
.
In addition, Nippon Paint is actively carrying out mergers and acquisitions activities, taking advantage of the high growth potential and stable cash flow of the coatings market to firmly establish Nippon Paint's sustainable growth and further expand its global market share
.

Under the Nippon Paint Group's ownership, combining the Group's investment capabilities and capabilities in brand management, marketing and innovation with recognised local brands and strong trade and retail relationships, will achieve scale in France, Spain, Italy and Portugal , followed by other major European markets, including some new Central European countries
.

Cromology will provide the appropriate level of scale, volume and manufacturing capacity to form an entry point for establishing a decorative paint and coatings business in Europe and provide a platform for other acquisitions
.

Cromology's comprehensive wholly-owned network of 386 company-operated stores across France, Portugal and Switzerland offers the opportunity to leverage the operational capabilities of the Dulux Group-run trade center
.
It also provides a powerful platform to leverage the Dulux Group's ability to sell to DIY consumers in retail channels such as Swamp Hardware and Standalone Hardware
.
Finally, it also offers the opportunity to launch other brands within the Dulux Group's portfolio, including wood care and texture coatings as well as sealants, adhesives and fillers
.

The acquisition is expected to help increase earnings per share from the first year of the acquisition
.
The stake in Cromology will be acquired by DGL International (UK) Ltd, a newly formed UK company of the Dulux Group, which uses funds provided by Nippon Paint Holdings Ltd through borrowings from financial institutions
.
Nippon Paint is not proposing to raise equity financing
.