Akzo Nobel Shares Gain After Rs 2,143-Crore Intergroup Deal

Shares of Akzo Nobel India Ltd. gained on Tuesday, after the company announced that it will transfer its powder coatings business and international research and development centre to its Dutch parent firm Akzo Nobel NV in a Rs 2,143-crore intergroup deal, to streamline the company's business.

The company's board of directors accepted the binding offer from AkzoNobel NV, which includes Rs 2,073-crore slump sale of the powder coatings business and Rs 70 crore transfer of the international research centre, according to a late night regulatory filing on Monday.

The company has accepted the sale and transfer of ANIL's powder coatings business and the international R&D on a slump sale basis as a going concern. This will allow ANIL to strengthen its position in its liquid paints and coatings business, while divesting its existing non-core assets.

"Each of the aforesaid slump sale transactions will be undertaken through separate business transfer agreements, with an indirect wholly owned subsidiary of Akzo Nobel NV," it added.

ANIL's board had received the binding offer letter from Akzo Nobel NV, the ultimate holding or promoter company of the paint maker on Monday.

In addition, AkzoNobel India will acquire intellectual property rights of Akzo Nobel Coatings International BV for its decorative paints business in India, Bangladesh, Bhutan, and Nepal for a consideration of Rs 1,152 crore.

"These transactions will make Akzo Nobel India a more focused liquid paints and coatings business and enable it to become a fully brand-and-technology-independent company, for its core decorative paints business," the company said in the filing.

However, it added that the execution of these transactions is subject to approval of the shareholders of Akzo Nobel India and the supervisory board of Akzo Nobel NV.

ANIL will seek its shareholders' approval in the coming weeks, with the voting process expected to conclude a month later, the filing said.

Shares of Akzo Nobel India rose as much as 2.33%, before paring gains to trade 1.28% higher at Rs 3,315.55 apiece, as of 1:52 p.m. This compares to a 0.17% advance at the NSE Nifty 50.

The stock has risen 21.12% in the last 12 months. Total traded volume so far in the day stood at 0.02 times its 30-day average. The relative strength index was at 40.47.

One out of two analysts tracking the company maintains a 'buy' rating and one recommends a 'hold', according to Bloomberg data. The average of 12-month analysts' price targets implies a potential upside of 18.6%.