The hottest merger will reshape the world paint an

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Mergers and acquisitions will reshape the world paint and coating industry

mergers and acquisitions will reshape the world paint and coating industry

May 9, 2017

[China paint information]

according to the upcoming report of IHS chemistry, the market value of the paint and coating (P C) industry in 2016 is estimated to be $135 billion. According to Sherwin Williams, a world-renowned coating manufacturer, the global coating industry is still very fragmented. The top ten manufacturers' sales in 2016 totaled US $66.4 billion, accounting for only 49% of the market share today, and there are more than 7500 companies in the rest of the market. In this industry, the world's leading companies will continue to acquire small enterprises, but large-scale mergers and acquisitions will also be carried out among major companies. SW, the third largest company in the world by sales, announced in May 2016 that it would acquire Valspar, the fifth largest company in the world, which was originally planned to be completed in April this year. Because the divestiture required by the Federal Trade Commission (FTC) was longer than expected, it was expected to be completed in June. After the completion of this acquisition, it will become the largest paint manufacturer in the new paint industry, with a total sales of US $16.3 billion in 2016, accounting for 12.1% of the world market share. However, as PPG tries to acquire AkzoNobel, it means that there will be more mergers and acquisitions in the coating industry

PPG industry, SW and AkzoNobel, the three largest coating companies in the world, together account for 63% of the total sales of the top ten coating companies, while the sales of the three largest companies accounted for 48% 10 years ago. When SW and Valspar complete the merger, this figure is expected to reach 70%. About 80% of the sales of SW company are architectural coatings, mainly in North America. The Valspar market is more diversified, with architectural coatings accounting for about 40%. The other markets include packaging, coil, wood and general industrial coatings. The geographical location of Valspar market is also more diverse, and about 46% of the sales revenue comes from outside the United States. SW predicts that after the merger, it will save nearly $280million a year

in the process of strong integration of the coating industry in North America and Western Europe, the rest of the world is still dominated by small and medium-sized enterprises. In the Asia Pacific region, small and medium-sized manufacturers account for about 60% of the coating market. The annual sales of these enterprises are less than US $500million, and their scale is only 25% and 35% of the same level in North America and Europe

henrixandersen, President and CEO of Hempel, another large manufacturer, said: "the merger and acquisition activity in 2016 reached an all-time high, and the integration is expected to continue." "Integration is also the requirement of business globalization to meet the needs of customers."

with the merger of SW and Valspar, PPG, currently the world's largest, is trying to acquire AkzoNobel, the second largest paint manufacturer. Although AkzoNobel has continuously rejected PPG's acquisition offer, on April 24, PPG industries announced that the acquisition offer of AkzoNobel was increased by 8% to US $28.8 billion, further pressuring the latter to start negotiations. On the same day, AkzoNobel confirmed that it had received the third unilateral and conditional takeover offer from PPG group. AkzoNobel's board of directors and board of supervisors will jointly carefully consider and consider the acquisition offer. If the acquisition takes place, the combined company will have sales of $29billion in 2016, becoming the largest paint manufacturer so far, and its market share will reach 21.5%, although antitrust authorities may force the divestiture of some businesses. If the two major coatings giant mergers and acquisitions are passed, sw/valsp is a fully biodegradable plastic resin AR and the potential ppg/AkzoNobel scale will far exceed other peers. PPG believes that the merger of the two companies is estimated to produce an annual synergy of at least $750million

michaelmcgarry, chairman and CEO of PPG, said, "we believe that the coating industry will continue to integrate. Our acquisitions will include all regions and various end markets, and we will continue to carry out high-quality mergers and acquisitions of all sizes."

emerging market regions grew rapidly

in 2016, the global paint production exceeded 54million tons, with a market value of about $135billion, and the production has more than doubled that of 20 years ago. According to IHS chemical data, the growth rate of coating demand in Asia is faster than that in other regions, and the consumption in this region accounts for 50% - 55% at present. Ericli zidin, senior analyst of IHS chemistry and the main author of the report, predicted NAK, "From 2016 to 2021, the average annual growth rate of the overall demand for coatings in the United States is expected to be 3%, that in Western Europe is expected to be 2%, and that in the world is expected to be about 4% per year. The demand growth rate of coatings in emerging market countries/regions is higher, and the growth prospects of the Chinese market are the best. The recent average annual growth rate is expected to be 6%-7%, 6.6% in India, 4%-5% in Iran, 4% in Poland, and 3%-4% in Saudi Arabia.

pay more attention to sustainable development

as in other industrial fields Paint and coating companies are also achieving greater sustainable development through product or process improvement. Andersen, Hempel company, said: "the application market now pays more attention to sustainable products than ever before. More and more countries such as China have formulated stricter regulations to make customers pay more attention to sustainable paint products."

ppg indicates that the focus of sustainable development is to reduce energy consumption and emissions in the process of coating production, and minimize waste generation and water consumption. Of course, the premise is that the control range of displacement rate (mm/min) is not 20 (0.5) (5) 0, which affects the coating quality or final appearance. The company is also reducing or eliminating the use of organic solvents to reduce volatile organic compounds (VOC) emissions and to help customers minimize carbon dioxide emissions

clausrettig, chairman of Evonik's resource efficiency business unit, said that "resource efficiency" is one of the world's leading trends. Trends include energy efficiency, such as ambient temperature and ultraviolet (UV) curing systems. In general, sustainable development will focus on the development of bio based raw materials, water-soluble or low VOC formulas. For example, the silane product portfolio developed by Evonik not only meets the requirements of the marine and protective coating industry, but also has higher corrosion protection performance and almost zero VOC emission compared with conventional solvent based zinc silicate coatings

regulations become the driving force of growth

according to IHS chemistry, air pollution regulations will continue to promote the development of new coating technology in the next five years. IHS chemical company said that although the overall growth of coating demand is expected to be relatively slow, high solid coatings, powder coatings, UV curing and two-component coatings with water solubility and non-standard testing methods that can be self-made by laboratories in the future still have good growth prospects

the coating industry also agrees with this view. McGarry of PPG said that the coating industry has been affected by environmental regulations and will continue to change with the economic and regulatory environment. Limiting VOC emissions worldwide directly affects the formulation design of coatings and the selection of raw materials. To this end, Evonik has developed an environmentally friendly adhesive suitable for zinc rich coatings, which is very safe for the environment and easy to process

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