JSW Paints’ $1.08 Billion Acquisition of Dulux Owner: A New Era for India’s Paint Industry

In a landmark move that is set to reshape the Indian paints industry, JSW Paints, part of the diversified JSW Group, has signed a definitive agreement to acquire up to 74.76% stake in Akzo Nobel India, the owner of the iconic Dulux brand, for ₹8,986 crore ($1.08 billion). This acquisition, one of the largest in the sector’s history, marks JSW Paints’ most ambitious step yet to become a dominant force in both the decorative and industrial paints markets.

The Deal: Details and Significance

JSW Paints will acquire its stake from Akzo Nobel India’s Dutch promoters—Imperial Chemical Industries and Akzo Nobel Coatings International BV—who together hold nearly three-quarters of the company. The transaction is subject to regulatory approval and will trigger a mandatory open offer to public shareholders for up to 25.24% of Akzo Nobel India’s equity. If successful, this move will not only make JSW Paints the fourth-largest paint company in India but also a formidable competitor to established giants like Asian Paints, Berger Paints, and Kansai Nerolac.

Strategic Rationale: Why JSW Paints Went Big

The Indian paint and coatings market is valued at around ₹90,000 crore and is among the fastest-growing in the world. Despite entering the market six years ago, JSW Paints has struggled to break into the top tier of decorative paints. By acquiring Akzo Nobel India, which commands a strong presence in the luxury and ultra-premium segments with its Dulux brand, JSW Paints gains instant access to a robust distribution network, premium product portfolio, and significant brand equity.

Parth Jindal, Managing Director of JSW Paints, emphasized the transformative nature of the deal:

“With the magic of Dulux and the thoughtfulness of JSW Paints, we look forward to building the paint company of the future.”

Market Impact: A Fresh Coat of Competition

The acquisition is expected to intensify competition in the Indian paints sector. Akzo Nobel India, with its annual production capacity of 250 million litres and a market share of about 7%, has been one of the most profitable players in the industry. Its stronghold in urban markets and focus on high-end decorative paints make it a valuable addition to JSW Paints’ portfolio.

Following the deal, JSW Paints will emerge as the second-largest player in the industrial segment and secure the fourth spot in the decorative paints market. This positions the company to challenge the dominance of Asian Paints and Berger Paints, while also competing with new entrants like Birla Opus from Grasim Industries.

The Road Ahead: Integration and Growth

The acquisition is not without challenges. Akzo Nobel India recently divested its powder coatings business, which accounted for 12-14% of its sales, to its Dutch parent, slightly diminishing the deal’s immediate value. Additionally, the paints industry has faced sectoral headwinds, with demand falling by 4-5% in FY25 and profit margins under pressure due to rising costs and global uncertainties.

However, JSW Paints has demonstrated resilience, turning profitable at the operating level for the first time in FY24 with an operating margin of 3%. The integration of Akzo Nobel India’s brands, employees, and distribution channels is expected to accelerate JSW Paints’ growth trajectory, enabling it to deliver greater value to customers and stakeholders.

Industry Reactions and Future Prospects

Industry leaders see this acquisition as a pivotal moment. Greg Poux-Guillaume, CEO of AkzoNobel, commented:

“This transaction is a significant milestone in the execution of our strategy. AkzoNobel India has been a consistently strong performer, and we are proud of the brand and talent that have made it a success. With JSW, we are confident the business is in the hands of a long-term partner with deep local expertise and strong ambitions in the sector.”

As the deal awaits regulatory clearances and the outcome of the open offer, all eyes are on JSW Paints to see how it leverages this acquisition to disrupt the market and set new benchmarks for innovation and customer satisfaction in India’s vibrant paints industry.

In summary, JSW Paints’ $1.08 billion acquisition of a 75% stake in Dulux owner Akzo Nobel India is a game-changing move that will reshape the competitive landscape of the Indian paints sector, offering new opportunities for growth, innovation, and value creation1.