24/11/2025
Dulux Maker Reveals Plans for Major Paint Merger
This week’s key terms/concepts:
• Mergers: A type of business transaction in which two business entities combine into one, typically equal between shareholders.
• Parent Company: A business that owns or controls one or more other companies, known as its subsidiaries.
• Asset Manager: A firm that invests and manages money on behalf of clients such as individuals, companies, or pension funds.
Earlier this week, industry giants AkzoNobel, maker of Dulux paint, and Axalta Coating Systems announced plans to merge in a deal valued at £25 billion. The fusion would create one of the world’s largest players in the painting and coating industry, with AkzoNobel shareholders expected to own 55% of the new group and Axalta investors the remaining 45%. However, the decision has not been universally welcomed by investors. The announcement follows a year on from AkzoNobel’s statement in September 2024 of their cost-saving plan to cut around 2,000 jobs globally. Asset manager Artisan Partners, a significant Axalta shareholder known for its active involvement in governance matters, has been particularly vocal in opposing the merger and has urged fellow shareholders to reject the deal.
Why is this significant?
AkzoNobel CEO Greg Poux-Guillaume sees the merger as an opportunity for the combined business to make cuts and increase profitability, particularly as the paint industry faces rising costs and uncertainty related to tariffs. Despite this, Artisan Partners has stated that the merger has come ‘out of the blue’ given that executives had recently assured investors that free cash flow would be used for aggressive share repurchases. Management had previously expressed confidence in Axalta’s long-term prospects and suggested that substantial buybacks would take place over the coming years. For Artisan, the sudden shift away from these assurances has raised concerns about the strategic rationale behind the deal.
Questions have also been raised about whether AkzoNobel is a suitable partner for driving long-term growth, given its declining earnings over a five-year period. Nevertheless, Axalta maintains that the merger represents the best opportunity for substantial growth. With Axalta’s stock already coming under pressure this year, the outcome of this dispute carries real financial consequences.
What could this mean for law firms?
Large corporate law firms with strong M&A, corporate governance, and disputes practices may see increased demand for advice if shareholder activism continues to rise. Where investors challenge a transaction, firms experienced in contested deals, fiduciary duty reviews, and shareholder litigation are likely to be required. More broadly, this situation highlights an ongoing trend: activist investors are increasingly prepared to intervene in major strategic decisions, creating continuing opportunities for legal advisers across both transactional and contentious work.
Shareholders now await the next stage of the process as the proposed merger continues to develop.
Lex Weekly 