For Akzo Nobel India Public Investors, there is a risk to JSW Deal

Copyright © HT Digital Streams Limit all rights reserved. For Akzo Nobel India Investors, the risk of reverse merger with unlisted JSW paint drugs Manish Joshi 2 min Read 30 Jun 2025, 05:30 IST JSW Group’s aggressive driving style can be beneficial to the shareholders of Akzo Nobel India. (Reuters) Summary The possibility of an unfavorable merger relationship for the public shareholders of Akzo Nobel India cannot be excluded, even if independent values ​​are appointed. Akzo Nobel India Ltd, popular for his Dulux Paint brand, will become an Indian company as JSW Paints announced the acquisition of 74.76% of his Dutch owner. This transaction changes the Pik Order of the Indian paint industry. JSW Paints becomes the fourth largest player in terms of revenue after Asian Paints Ltd, Berger Paints India Ltd and Kansai Nerolac Paints Ltd in that order. So what are the implications of the transaction from the perspective of non-promotor public holders of Akzo Nobel India? JSW Paints has announced an open offer for the remaining 25.24% stake held by public shareholders at £ 3,417.77 per share. Akzo’s shares closed 7% higher on Friday to £ 3,419. Even if a small part of the open offer is subscribed, JSW Paints will eventually have more than 75% stake, as it will already be at 74.76% after the agreement. The Securities and Exchange Board of India (Sebi) mandate that promoters of listed companies cannot keep more than 75% of the shareholding in a listed entity to ensure adequate liquidity in the market. If the promoter that crosses the set limit due to a repurchase, open offer or a merger, promoters must reduce their shareholding to 75% or less within a timeframe allowed by SEBI. So, JSW Paints will have to think of an alternative to reduce its interest. JSW Group already has JSW Steel, JSW Energy and JSW Infrastructure as three listed businesses (JSW Holdings is also listed, but it has no material business), with the public problem of JSW Cement probably in the near future, as it was approved by Sebi. So, it also wants to list JSW paint. There is a risk to a reverse merger for Akzo Nobel India’s shareholders on unfavorable conditions. In an inverted merger, an acquisition company merges with the acquired company. This means that JSW paints can be reversed with Akzo Nobel India. The possibility of an unfavorable merger relationship for the public shareholders of Akzo Nobel India cannot be excluded, even if independent values ​​are appointed. There are precedents available when dominant shareholders have a favorable merger ratio, despite having inferior fundamentals. Cairn India was merged in Vedanta in 2017. Thereafter, the merger ratio was slightly set up to abandon public shareholders from Cairn India to a color and scream of them. But even then, the concerns about the fair valuation of Cairn India remained. In addition, the aggressive management style of JSW Group may be beneficial to Akzo Nobel India’s shareholders. The group is known for inorganic growth through acquisitions. Therefore, it will not be surprising if they pursue more acquisitions from smaller players outside the top five businesses by an share exchange after JSW Paints is listed. Indigo Paints, Shalimar Paints and Sirca Paints are some smaller businesses that can be potential candidates. Equity conversion acquisitions help reduce the promoter stake to meet the 25% public shareholding norms. With the valuation, Akzo Nobel India’s public shareholders can hope for a re -presentation. India’s top two paint companies, Asian Paints and Berger Paints, are trading at a price-to-earnings multiple of about 52-53 times, compared to 36 times for Akzo Nobel India, based on Bloomberg FY26 consensus estimates. While the top two companies have a larger presence in decorative paints, which have more brand loyalty and reach higher margins compared to the industrial segment, the significant gap in valuation seems unjustified. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More topics #akzo Nobel India #sebi #JSW Steel Read next story