AkzoNobel, the hottest paint giant, went into hibe

2022-10-15
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Paint giant AkzoNobel entered the dormant period after the "stripping action"

paint giant AkzoNobel entered the dormant period after the "stripping action"

November 22, 2018

"for a period of time, I felt like I was going to divorce myself." Thierry vanlanker, CEO of AkzoNobel, said half jokingly at a media communication meeting on November 20. At that time, AkzoNobel's CEO was still ton B ü chner, who made the decision to spin off the professional chemicals business in March 2017. At this time, van Dirui is the person in charge of this sector. He is also one of the executives of AkzoNobel. This stripping action seems to tear him in half

as a part of AkzoNobel's troika, professional chemicals contribute about one third of the company's total revenue. Decorative paint and functional paint are the other two main businesses of the Dutch chemical giant, which owns well-known brands such as Dulux. However, these plates ushered in a major split not long ago

the decision to split the professional chemicals sector was made by Don Boehner, then AkzoNobel CEO, in 2017. This sector is one of the company's three major business departments, accounting for about one third of the total revenue. After this spin off, the new AkzoNobel will focus on two existing businesses: decorative paint and functional paint

since January 2017, the professional chemicals sector has begun to operate independently of AkzoNobel. In China, a diversified production base, six factories and one fifth of the employees were included in the new company, while more than 20 factories remained under AkzoNobel

such a spin off is different from the development history of AkzoNobel, which started with mergers and acquisitions. In its past mergers and acquisitions, the most famous case is the € 11.8 billion acquisition of paint and coating manufacturer ICI. At that time, Dulux brand became a member of AkzoNobel

the last large-scale split of AkzoNobel dates back to 2006. The company sold the pharmaceutical department okanon biotechnology for 11billion euros, and acquired Imperial Chemical a year later. At that time, the pharmaceutical sector also accounted for about one-third of the company's revenue

for this Dutch multinational enterprise that continues to incorporate new members, integration is a necessary process, and Lin Liangqi also takes this as his biggest work achievement in the past seven years. He intends to make this company, which includes many paint, coating and chemical brands, a whole, at least in the Chinese region he is responsible for. Of course, this work is not easy

three months after the decision to split, Tang Bona resigned as CEO for health reasons, and van Dirui became his successor and continued the split strategy. In March this year, the Carlyle Group and the Singapore Government Investment Corporation (GIC) spent 10.1 billion euros to buy these assets

when reviewing the whole spin off plan, fandirui said that the primary reason for making this decision was that the correlation between professional chemicals and paint and coating sectors was not strong, and there were great differences in business types. This means. Although the two are in one company, the effect of "1 plus 1 is greater than 2" cannot be achieved

he did not shy away from the influence exerted by the company's shareholders. "The overall business performance of a diversified company is relatively stable, which will be favored by investors in the past, but now, their ideas are different." Fan Dirui said that the market valuation of diversified companies will be lower, because it is difficult for investors to evaluate the future performance of each business

the announcement of the divestiture of the professional chemicals sector coincided with PPG's tender offer for AkzoNobel, both of which are comparable global giants in the coating industry

don Boehner, the predecessor of van der Rohe, rejected PPG's increasing offer three times, and soon announced the long prepared spin off plan and new financial goals. He tried to convince shareholders that the split company could bring them greater returns than being acquired

this is bound to become a milestone in the history of AkzoNobel enterprises. After many on-off and on-off experiences, the company finally focused its business on the coating and paint industry

in October last year, AkzoNobel planned to expand its territory in the industry through another merger and acquisition. Its trading partner was American peer aiside. The two sides conducted merger negotiations, but ultimately failed

fandirui revealed that the transaction was initially proposed by Aishi De, and the other party was willing to merge into AkzoNobel, but the negotiation had to be suspended because Aishi De's bid was too high

after the end of 2017, which was slightly turbulent, fandirui released a new policy agenda. He put more emphasis on the profitability of the company rather than scale expansion, in order to further enhance the financial strength of AkzoNobel

with the help of many times and daily large purchases of plastic bags in the past, AkzoNobel has a variety of product lines, including decorative paint, powder paint and automotive paint, but the consequence of continuous expansion is that the production and use of these businesses according to their regulations, the sales and supply departments do their own things, and the supermarket cashier also said that they could not be well integrated

"in the big room of AkzoNobel, everyone still lives in their own corners. Every place is sparrow, although it is small, it has five dirty parts." Linliangqi, President of China, once said so

the integration of internal IT system, supply chain and distribution network has become the current focus of AkzoNobel. Last year, the company also set up two new senior management positions, respectively responsible for the global production and marketing of coatings and paints

van Dirui, for example, said that AkzoNobel would unify the procurement of raw materials in the future to enhance its bargaining power. He hoped that such internal potential tapping could increase the company's profit margin by 4 percentage points

at the same time, the goal of improving profit margin has been challenged by the rise in raw material prices. Lin Liangqi described it as the biggest contradiction facing the company at present: one is the rising cost, the other is the customer who hopes to gradually reduce the price

AkzoNobel has raised the price of its products, which van der Rui described as a coping strategy to offset the sharp rise in the price of raw materials. Since 2017, the cost of materials, including resins and solvents, has increased

after the implementation of a number of measures, AkzoNobel achieved a revenue of 6.94 billion euros and a net profit of 820million euros in the first three quarters of this year

fandirui has not given up AkzoNobel's tradition of adjusting its product portfolio through continuous mergers and acquisitions. For him, the ideal acquisition targets at present are those smaller companies, such as colourland paints, which was incorporated this month. This Malaysian paint and coating manufacturer has only about 200 employees

fan Dirui's explanation of this acquisition preference is that because the company focuses more on internal transformation, it is not suitable to carry out a large-scale M & A at present, which will involve more energy of the company

but fan Dirui changed the subject, "but who knows? Maybe one of our competitors has offered to marry (merge) again, and the price is also very appropriate." He also did not forget to state that this was not a hint that there might be large-scale mergers and acquisitions in the future

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