Dutch AkzoNobel to sell chemicals unit for $12.6 billion to US-based investors Carlyle

"AkzoNobel on Tuesday announces the sale of 100 percent of its specialty chemicals business to The Carlyle Group for an enterprise value of 10.1 billion euros... as part of its strategy announced in April 2017," it said. The sale of the Specialty Chemicals operation to Carlyle and Singapore's GIC sovereign wealth fund for a slightly better than expected price will allow Akzo to focus on its main paints and coatings business.

It delivers one of the biggest commitments made by Akzo Nobel in its defense against a 26 billion euro ($32 billion) takeover offer from US rival PPG Industries last year. It may also help to repair strained relationships with shareholders unhappy with the rejection of the bid.

Akzo Nobel CEO Thierry Vanlancker, who took charge last July after the bid battle, expects 7.5 billion euros in net proceeds from the sale. The 10.1 billion euro valuation includes debt. The division being sold produces an array of chemicals used in plastic packaging, tissue paper, cleaning materials, pharmaceuticals, food products, salts and adhesives.

The 7.5 billion euro total will be returned to shareholders, Vanlancker said, with the company deciding on the distribution through dividends or share buybacks in the coming months.

The deal leaves Akzo as "one of the top 3 largest paints and coatings companies in the world," Vanlancker said.

He said Akzo must now deliver on a goal to achieve a 15 percent margin on sales by 2020, after that measure fell to 9.4 percent last year.

That goal will mainly be delivered through cost savings and efficiency measures, Vanlancker said, as overall sales growth in the paints and coatings market is expected to remain modest.

"We will be looking at size (acquisition) opportunities as they come along", Vanlancker said. "But size is really not top of mind, it's performance of the business." The remaining Akzo business will have 35,700 employees, while Speciality Chemicals employs around 10,000.

Akzo will try to strengthen its position in promising markets such as powder coatings, which showed 10 percent global growth last year, the CEO said. Akzo also expects its sales of decorative paints in China and Europe to increase.

Akzo first announced plans to sell the business last April, when PPG was in full pursuit. Many shareholders were dismayed as Akzo's boards appeared uninterested in talks with PPG and when they ultimately rejected the U.S. company's best offer.

The deal is subject to regulatory approvals and is expected to be concluded before the end of the year, Akzo said.