(Bloomberg) -- Nippon Paint Holdings Co. announced plans to purchase global chemicals formulator AOC for $2.3 billion.
The Japanese firm will acquire all of the equity interest of AOC’s parent company LSF11 A5 TopCo and its subsidiaries from Lone Star Fund, according to a statement Monday. The Tennessee-based firm produces coatings, colorants and composite resins.
Japan’s Nippon Paint has been expanding via several acquisitions in recent years. The company acquired Australian firm DuluxGroup Ltd. back in 2019, and in 2021 bought Europe’s Cromology Holding and its subsidiaries.
AOC has a “leading position” in the US and Europe, which will help Nippon Paint gain strength in those respective markets, Nippon Paint said in a presentation explaining the deal.
Nippon Paint aims to close the transaction during first half of fiscal 2025, and will finance it with cash and new debt. No equity financing is expected to be required, it said, and any financial impact on the current calendar year should be insignificant.
The deal will be earnings per share accretive from year one, have low business risk and AOC will have the potential to create value under Nippon Paint, the Japanese company said.
“Joining Nippon Paint will allow AOC, which has excelled in growth and margin expansion under private equity ownership, to pursue additional value creation from a longer-term perspective in both organic and inorganic initiatives,” it said.
Shares in Nippon Paint rose as much as 1.9% before closing up 1.4% Monday, trimming declines for the year to 10.7%.
--With assistance from Shoko Oda.
(Updates story throughout with detail from statement.)
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