International Coatings Scene
EUROPE
BY SEAN MILMO
EUROPEAN CORRESPONDENT
MILMOCW@RODPUB.COM
Acquisitions and divestments....
or the lack of them
Is Kemira’s
divestiture of
its coatings
subsidiary,
Tikkurila, a
sign that
Europe is
emerging
from the
recession?
Kemira of Finland announced in February that it is finally going ahead with the stock market floatation of
Tikkurila, its coatings subsidiary, which is a
strong player in the decorative and industrial
coatings markets of Scandinavia and Eastern
Europe, especially Russia.
The move was seen by some analysts as
evidence that the European coatings sector
and its supply chain is emerging from the
economic crisis with enough confidence to
take restructuring initiatives like spin-offs
which could lead to acquisitions.
Tikkurila was quickly labelled as a potential
takeover target. Dutch analysts surmised that
the Finnish operation might soon be the subject of a bid by Netherlands-based AkzoNobel,
the world’s biggest coatings company.
But speculation about major acquisitions
in the European coatings sector is a rarity at
a time when demand in the market in so
weak. A shakeup of the industry is considered inevitable because of a relatively high
number of financially enfeebled producers
following the recession. However the mergers
and acquisitions necessary for reorganization
are likely to be postponed until the European
economy fully recovers.
Companies have to use their own funds for
takeovers because of the reluctance of banks
to lend money for them. Divestments are one
way to raise cash but finding buyers for
unwanted businesses can be difficult.
“An economic downturn is not the time for
acquisitions,” said Rob Peacock, business
manager at IAL Consultants, London.
“Companies may want to sell businesses but
there are none wanting to buy them.”
DSM is, for example, planning to expand its
activities in specialty coatings resins as well as
in other activities in its performance materials
division. But for the moment it is ruling out big
acquisitions until it has completed the divest-
ment of three non-core commodity activities,
which is taking longer than expected.
