Wutelam, a Singaporean paint conglomerate, will buy a controlling stake in Nippon Paint Holdings, Japan's largest paint and varnish manufacturer, in a transaction worth about 1.3 trillion yen.
This message only confirms the earlier rumors about the planned deal. The Singaporean conglomerate will increase its stake in the Japanese firm to 55% from 39% through a private equity offering, intending to close the acquisition in January 2021.
Wootelam will allow Nippon Paint shares to continue trading on the stock market. This deal will be the first major takeover of a Japanese materials manufacturing company by a non-Japanese Asian buyer.
The Japanese manufacturer will use the proceeds from the transaction to gain full control over the joint venture controlling the duo's Asian operations, namely to increase the share from the current approximately 50%. In addition, Nippon Paint plans to buy the Indonesian division of the Wutelam conglomerate, which produces paints.
In addition to coatings, the Singapore company's order portfolio includes real estate and investment operations. It is estimated that the annual revenue of the business group in the paint segment is about 200 billion yen.
Nippon Paint, a company specializing in paint coatings for the automotive and construction industries, recorded consolidated sales of 692 billion yen in 2019.
Cooperation between the Singaporean and Japanese companies began in the 60s, when they were just beginning to explore the Asian market through joint ventures, reaching strong positions in Malaysia and China, which account for about 30% of global demand for paint and varnish products.
In 2014, Wutelam increased its stake in Nippon Paint to 38.9% from 14.5% in order to deepen the cooperative relationship.
Currently, the Asian business of the Japanese manufacturing company accounts for 50% of its total consolidated sales and 70% of its operating profit. Against the background of the deteriorating Japanese market conditions, Nippon Paint will accelerate its business development activities abroad under the auspices of the Singapore conglomerate, which has an extensive network in Asia and other countries.
The global paint market is estimated at 20 trillion yen, but it may grow to 30 trillion yen. Demand for them is expected to grow in China and other parts of Asia, as well as in the Middle East, Africa, and South America.
This sector is led by Pipigi Industries and Sherwin-Williams from the USA, as well as the Dutch multinational company AkzoNobel. Together, they control about 30% of the global market. The Wootelam Nippon Paint Alliance will have to become a player in this market, occupying the 4th place.
More than half of the cost of paint production is accounted for by oil-based raw materials. Since large scale leads to lower procurement costs, the Big Three are increasing their potential through acquisitions. Wootelam and Nippon Paint also plan to actively buy targeted assets to build their potential, which could compete with larger rivals. 1xbet, you can unlock special promotions and rewards while enjoying your favorite sports betting and casino games. Whether you’re a new customer or an existing one, this is your chance to maximize your winnings and enhance your overall betting experience. Simply enter the 1xbet promo code during registration or deposit, and get ready to enjoy free bets, cashback, and enhanced odds.