Akzo Nobel: Takeover Offer Arrives a Month after Appian Purchase

Senior Fund Manager

Akzo Nobel is a classic example of a stock that successfully met all the Appian criteria. Below is a summary of the initial investment thesis.


  • A sustainable yield of 2.8%, supported by strong free cash flow generation (Free Cash Flow Yield of 6.4%) and a strong balance sheet (Net Debt to EBITDA of 0.3)


  • The valuation opportunity was a 30-45% discount to its closest peers.


  • Leading market shares in decorative paints (brands such as Dulux and Crown) and performance coatings provided an opportunity for a higher level of profitability and better returns.  


  • A new CEO proved to be the catalyst. Ton Bucher arrived in 2012 and set in place a strategy of making the business more efficient and reducing debt.  These moves have been successful and provided the company with a platform to pursue growth.
  • Akzo Nobel management have rejected the current offer, stating that the it “substantially under-values” the company. They have also announced plans to spin off its chemical business and focus purely on decorative paints and coatings. This move may not be enough to see off another bid and one could emerge in the foreseeable future.
  • Akzo Nobel Purchased for Appian Equity Fund and Appian Value Fund.

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