AkzoNobel Gets Into Yachting and PPG goes to Norway to Buy Paint

The Weekly Business Roundup

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Business Distillates

AkzoNobel Acquires Nautical Coatings Producer

New Nautical Coatings is marine coatings producer that primarily services yachts and personal boats with their Sea Hawk brand. AkzoNobel has acquired the Florida based business for an undisclosed amount, but they believe it will strengthen AkzoNobel’s position in the North American marine coatings business.

Marine coatings are super specialized in that they typically need excellent corrosion resistance, anti fouling capability, and withstand constant or frequent contact with salt water. One of the more challenging tests to pass in anti-corrosion coatings is continuous exposure to salt fog spray for thousands of hours.

Not only are marine coatings specialized, but needs and wants can vary based on the region’s climate, salinity of the water, and boat applications. A yacht is different from a fishing boat and operating in Alaska is different than the Mediterranean. This is the sort of quiet and super boring acquisition that screams out “cash cow.” Yacht owners are rich so they can afford to pay top dollar for their boat paint.

BASF Makes Board of Directors Change

Dr. Melanie Maas-Brunner will be taking over significantly more responsibility to 2021 with her appointment to the board of directors for BASF. She will assume the duties of Chief Technical Officer and will lead research in three divisions including Advanced Materials & Systems Research, Bioscience Research, Process Research & Chemical Engineering, and BASF New Business. Maas-Brunner has a PhD in chemistry from Aachen University and started her career as a research scientist with BASF.

After being a scientist for about four years Maas-Brunner started climbing the corporate ladder and now sees herself joining the executive board of directors for BASF. The new board of directors will have 4 members holding a PhD out of the 6 total members. BASF employs a lot of scientists, but one thing that people with PhDs should takeaway here is that it is possible to move to other functions outside of the lab. Chemical and material companies are all reliant on selling products that chemists have fundamental knowledge in and learning the business side for someone with deep technical expertise is easier than a financial person learning the chemistry.

BASF has been making some strategic moves lately with finalization of the sale of their concrete and cement additives business and consolidation of their financial and logistics services, which will result in 2000 layoffs by 2022. It will be interesting to watch how the largest chemical company in the world progresses through 2021.

PPG Acquires Nordic Paint Maker

Pittsburgh Paint and Glass otherwise known as PPG has offered to buy Tikkurila for about €1.1 billion. Tikkurila is primarily in architectural and decorative paints. For the North American readers think of this as PPG buying their Nordic counterparts who have a strong business where PPG is relatively weak. Tikkurila had 2019 sales of about €564 million that has primarily come from the Nordic and eastern European countries so the purchase price is about 2x their 2019 revenue.

This seems like a really good deal for Tikkurila and a way to leverage PPGs global expertise into a smaller market. I think both parties here probably got exactly what they wanted and it caps Tikkurila’s three years of progress to improve financial outcomes for the company with a big exit for the shareholders.

Brexit Deal Secures Tariff Free Trade Between UK and EU

ChemWeek’s Ian Young reported that the Brexit deal ensures that the trade of chemicals across the border will be tariff free with the total chemical business between the UK and the EU being worth about $54 billion annually. This is good news for the chemical industry as many raw materials come into the UK from the larger refineries in the EU to make localized products for the existing manufacturing industries in the UK.

Tariffs on chemicals, especially ones that are not produced in the UK, could have raised prices on some consumer products. I’m not sure if tariffs on these chemicals would have spurred actual development of manufacturing in the UK as I think the costs would likely have been passed onto the consumers. This is good news for the UK.

Happy New Year!

Tony

The views here are my own and do not represent those of my employer nor should they be considered investment advice.

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