Nippon Paint to acquire French paint maker Cromology

29 October 2021

Nippon Paint Holdings is to acquire Cromology Holding, a French maker of decorative paints, through a subsidiary.

Cromology is the fourth-largest maker of decorative paints in Europe and Nippon Paint expects to use the acquisition to expand its reach in France, Italy and other European countries.

Europe is the second biggest market for paint, following China. According to the American Coatings Association, the region is expected to continue growing and hit more than US$200bn in market size by 2024, a 22% gain over 2019.

Nippon Paint will pay €1.15bn (US$1.3 billion) and purchase all Cromology shares during the first half of 2022.

The French company, established in 2006, logged €628M in sales in 2020. Nippon Paint has no plans to raise funds by issuing new shares; it has decided to finance the acquisition with existing cash and loans from financial institutions.

The acquisition will be carried out through DuluxGroup, a major Australian paint maker under Nippon Paint.

During a news conference on Wednesday, Yuichiro Wakatsuki, Nippon Paint’s representative executive officer and Co-President, said the group expects Cromology to "contribute to our earnings per share from the first year" and contribute to creating shareholder value.

Patrick Houlihan, DuluxGroup’s chairman and chief executive officer, said the acquisition will give the group "threefold leverage."

Said Houlihan: "We believe there is potential for substantial revenue synergy where Nippon Paint’s scale and Dulux’s capabilities in channel distribution can help Cromology to lift opportunity to the next level."

Cromology underwent a management change in 2018. Since then, Houlihan said, "we have seen consistent improvement in Cromology."

He said a new product mix and other strategies have helped the French company increase its revenue and widen its operating margin.

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