Paints industry to see even more M&A - Citigroup

19 October 2007 18:27  [Source: ICIS news]

TORONTO (ICIS news)--The paints industry will likely see further consolidation, coming on top of a string of recent mergers and acquisitions, Citigroup said on Friday.

 

“Another global deal on the scale of Akzo-ICI is possible,” the analysts said in a research note to clients.

 

After consolidation in North America – where the top five companies now supply 70% of the market - attention would shift to emerging markets, they said.

 

Companies driving the consolidation would be paints and commodity chemical makers who wanted to go downstream.

 

Consolidation could be driven by firms such as Dow Chemical, Akzo Nobel, Sherwin Williams as well as private equity, the bank said.

 

Citigroup added it remained cautious on paint makers with significant exposure to the ailing US architectural market.

 

“Weak demand and elevated raw material cost will squeeze companies without pricing power,” the analysts said.

 

Among US companies, Citigroup prefers PPG Industries, which had excellent geographic diversification after recent acquistions and was less exposed to the US than competitors, it said.

 

Bank of America earlier on Friday reduced its earnings estimates for PPG.

By: Stefan Baumgarten
+1 713 525 2653

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