Nippon Paint Holdings in $2.3bn deal for AOC

January 2025 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

January 2025 Issue

Nippon Paint Holdings has agreed to acquire LSF11 A5 TopCo LLC and its subsidiaries, collectively known as AOC, from Lone Star Funds in a deal worth around $2.3bn.

The deal, which was announced in late October, is expected to close in the first half of 2025, subject to customary closing conditions and regulatory approvals.

Nippon Paint anticipates that the acquisition will be accretive to earnings per share from the first year of ownership without relying on synergies. The company believes that the acquisition will create long-term value and support its vision for the future.

AOC is a leading manufacturer of specialty chemical formulations in the unsaturated polyester and vinyl ester sectors. With operations in North America, Europe and Asia, AOC serves customers globally in the infrastructure, construction, transportation and recreation sectors.

The acquisition of AOC is expected to enhance Nippon Paint’s global presence in the chemicals sector and comes as the company continues its strategy to expand its portfolio and strengthen its position in the global market by leveraging AOC’s advanced technological capabilities, broad customer base and flexible logistics network to drive growth.

Nippon Paint recently generated the equivalent of €8.7bn in revenue, three quarters of which came from decorative paints and coatings for use in construction, including the Dulux brand. AOC is likely to be allocated to the smaller adjacencies business segment of the Nippon Paints business, which accounts for 11 percent of total sales and already includes adhesives and sealants.

“This acquisition enhances our global presence and product offerings in the specialty chemicals sector,” said Yuichiro Wakatsuki, director and co-president of Nippon Paint. “AOC’s expertise complements our existing portfolio, allowing us to better serve our customers worldwide.”

“We are immensely proud of the growth and innovation AOC has achieved during our ownership,” said Donald Quintin, chief executive of Lone Star. “AOC is backed by a strong management team that has been instrumental in driving the company’s success and unlocking value. We believe AOC is well-positioned for continued growth, and we wish the team continued success in the future.”
“I would like to thank Lone Star for their support and partnership over the last three years,” said Joe Salley, chief executive of AOC. “I would also like to thank our outstanding management team and employees for their tireless efforts to deliver best-in-class results for our customers and shareholders. We are excited about the opportunities that lie ahead as we join Nippon Paint Group, a company that shares our commitment to integrity, quality and innovation.”

“Backed by its broad customer base, including areas with significant growth potential, advanced technological capabilities that allow for high-level product customization tailored to customer needs, and flexible logistics network, AOC has secured a leading position in the US and European markets as a specialty formulator for CASE (coatings, adhesives, sealants and elastomers), colorants, and composite solutions,” said Nippon Paint in a statement.

AOC’s biggest product lines by volume are coatings and protective barriers, which are used across a variety of product lines, including potable water pipes to fuel tanks, custom conventional composite formulations such as laminates and panels used in buildings, and colorants and adhesives, which are used in boats and car parts. In the fiscal year ended in December 2023, AOC generated $528m in earnings before interest, taxes, depreciation and amortisation, down $3m from the previous year.

Texas-based Lone Star Funds acquired AOC in 2021 from private equity firm CVC Capital Partners for an undisclosed amount. Since then, AOC has invested heavily in its core business systems, including commercial excellence, innovation, procurement and manufacturing efficiency, to drive earnings growth. AOC also invested in the expansion of its executive leadership team, broadening their capabilities to efficiently manage the global enterprise. AOC operates 14 plants worldwide, five of which are in Europe.

Richard Summerfield