Monthly Deal Review – October 2026

DEAL OF THE MONTH: NIPPON PAINT X AKZONOBEL

• On October 5, 2026, AkzoNobel agreed to sell its decorative paints business in seven Southeast Asian and Pacific markets to Nippon Paint for c. USD1.35bn, or 21x 2025 EBITDA.
• The deal highlights a broader handover of emerging-market franchises from global groups to regional champions, with AkzoNobel completing its exit from Asian paints ahead of its merger with Axalta while Nippon Paint adds the Dulux brand across Southeast Asia, where it already operates.

BY THE NUMBERS

KEY TAKEAWAYS

• The Middle East led on value with USD6.1bn, nearly a third of it from Intel's USD1.9bn acquisition of Classiq, while Southeast Asia was the most active market with 172 transactions worth USD5.5bn
• Financials and real estate made up 32% of value, led by Sanlam's take-private of Santam and three Singapore property deals worth a combined c. USD1.2bn
• Six IPOs across the Middle East and Africa were sized at c. USD1.6bn combined, led by Banque du Caire at c. USD658m and DIP Holding at USD529m

NIPPON PAINT X AKZONOBEL

THE DEAL

On October 5, 2026, AkzoNobel agreed to sell its decorative paints business in Vietnam, Indonesia, Malaysia, Thailand, Singapore, Papua New Guinea, and Australia to Nippon Paint Holdings for an enterprise value of c. USD1.35bn. The business, which includes the Dulux brand in Southeast Asia and three production sites, generated revenue of USD291m and EBITDA of USD65m in 2025. That implies 21x trailing EBITDA. Nippon Paint is paying in cash funded by debt, and AkzoNobel expects to keep c. USD1.0bn after taxes and minority partners.

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WHY IT MATTERS

Recently, AkzoNobel is merging with Axalta, becoming the world's second-largest coatings group, with combined sales of USD16.2bn, behind Sherwin-Williams at USD19.8bn. Nippon Paint, fourth at USD9.6bn, is taking a different route to scale: rather than a global merger, it is adding market share in Asia by acquiring AkzoNobel’s Southeast Asian paints business, in a region where it is already a leading player. Investors welcomed the deal: on the day of the announcement, AkzoNobel shares rose 2.3% and Nippon Paint shares closed 3.45% higher.

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A shrinking business in a growing market. The business being sold has been shrinking: revenue fell c. 3% to USD291m in 2025 and EBITDA c. 6% to USD65m. Therefore, Nippon Paint is buying a recovery story and the market backdrop supports it: Mordor Intelligence forecasts the ASEAN paints and coatings market to grow from USD7.78bn in 2026 to USD9.92bn by 2031, with architectural paints, about 78% of the market, growing faster than the market as a whole.

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AkzoNobel sold for more than double its own valuation. AkzoNobel says the 21x price is more than twice its own trading multiple. With earlier sales in India (25x) and Pakistan (14x), it completes an exit from Asian paints worth more than EUR2.6bn (c. USD2.9bn), and the proceeds strengthen its balance sheet ahead of its merger with US coatings group Axalta, expected to close in early 2027.

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Nippon Paint pays a higher multiple for a smaller piece. AkzoNobel rejected a EUR12.5bn (c. USD14.1bn) joint bid from Nippon Paint and Sherwin-Williams for the whole company, then a EUR7.5bn (c. USD8.4bn) proposal for its entire paints business. Nippon Paint is now paying a higher multiple for the regional piece and expects it to lift earnings per share from the first year.

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A wider handover of emerging-market franchises. Global coatings groups are narrowing to positions where they hold scale, and regional champions with overlapping distribution are the natural buyers. The underlying market remains attractive: AkzoNobel reported higher decorative paints volumes in Southeast Asia in the third quarter of 2026, led by Vietnam, while volumes in China fell by a mid single-digit percentage.

OUR VIEW

We think the deal works for both sides, and it reflects a wider pattern: industrial groups are increasingly refocusing on markets where they hold a top-three position, because a strong market position is a key driver of value. AkzoNobel is selling a business worth about 3% of group revenue at a premium price to realign it’s strategic priorities after it’s merger with Axalta. Nippon Paint, already a leading player in Southeast Asia, is prioritizing the consolidation of this key market and extend the lead over other national competitors, hence acting as the perfect counterparty for AkzoNobel. However, most the risk is with the buyer: Nippon Paint is pricing in a major rebound in 2026 after a year in which the business shrank in a normal year.

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For owners of Southeast Asian businesses, the lesson is that premium valuations come from the right buyer, not the market average. Buyers pay for more than market share. Nippon Paint is not only acquiring market share but also household names like Dulux, a well-known premium brand, alongside Maxilite and Aquatech, which strengthens its offer at the top end of the market as well as adding volume. Since it already sells paint in every market in the deal, it also expects synergies of at least a high single-digit percentage of sales, enough to lift earnings per share from the first year. Therefore, businesses with a leading position or a distinctive brand, sold to a scaled buyer that can extract and realize synergy both, commands the strongest valuation.

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MARKET PULSE: OCTOBER 2026

October 2026 recorded 331 transactions worth USD14.5bn across Southeast Asia, the Middle East, Africa, and Central Asia.¹ Financials and real estate, grouped under Others, accounted for USD4.7bn, or 32% of disclosed value, ahead of TMT and Consumer and Manufacturing at USD3.6bn each. Activity remained concentrated, with 18 transactions of USD250m or more representing 76% of disclosed value; 134 transactions carried no disclosed value.

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