In this issue, I would like to introduce the acquisition of shares in a Malaysian manufacturer of paintrelated products by Nippon Paint Group (“Nippon Paint”), which was announced on March 16, 2021.
1. Nippon Paint’s overseas sales account for more than 70% of total sales
Established 140 years ago, Nippon Paint is one of Japan’s leading comprehensive paint manufacturers, with operations in 29 countries and regions, and a total of 34,000 employees in the group. The company operates in Japan, Asia, America, Europe, and Oceania, and has more than 100 group companies, with overseas sales accounting for 70% of total sales. Its products are diverse, including automobiles, buildings, bridges and other large structures, bullet trains, large machinery, ships, and office supplies. According to the Nippon Paint Holdings website, the company’s performance in fiscal 2020 was expected to be boosted by the acquisition of Australian paint manufacturer DULUXGROUP LIMITED and Turkish paint manufacturer BETEK BOYA VE KIMYA SANAYI ANONIM SIRKETI, which were consolidated in 2019. The company’s consolidated net sales increased 12.9% year on year to 781,146 million yen due to strong sales of general-purpose paints in China, its core business, as the Chinese economy recovered. The consolidated operating income also increased 11.4% year on year to 86,933 million yen, due to the effect of higher sales and lower raw material procurement prices, despite the absence of insurance income obtained in the previous fiscal year. Although Nippoin Paint’s sales was just over 200 billion yen in 2010, it has more than tripled in these ten years, placing the company in fourth place worldwide.
On January 25 2021, the company also acquired 100% of the Asian joint venture and the Indonesian operations of Wuthelam Group (Wuthelam), a collaborative partner for 60 years. As a result, Wuthram is expected to increase its shareholding in Nippon Paint from 39.6% to 58.7%. This series of M&A transactions with Uttram, with a total transaction value of 1.3 trillion yen, was one of the largest M&A deals by a Japanese company in 2020.
Nippon Paint established its office in Singapore in 1962 before the country became independent from Malaysia, and established a local office in Malaysia in 1967.
2. Vital Technical, a manufacturer of sealants and adhesives
i. Outline of the subject company
日本ペイントの2021年3月16日付けプレスリリースによれば、Vital Technical 社は2002年創業のマレーシアでシーラント 及び接着剤の市場シェアNo1.の有力メーカーです。同社は4か所の生産拠点を有し、東南アジアを中心に世界70か国以上に展開しており、2020年度の売上収益は約170百万リンギ（約 45億円）です。日本ペイントは、日本ペイントマレーシアを通じてこのVital Technicalの株式75%を取得しました。
ii. Aim of the investment
日本ペイントの塗料周辺事業の売上は全体売上の10%程度を占め、同社のプレスリリースによれば、「専門技術及びSAF（Sealants, Adhesives & Fillers、シーリング材・接着剤・フィラー材）に精通した優秀な経営陣の獲得に加え、日本ペイントグループ及びVital Technicalでの相互販売の拡大や、Selleysを含めた製品ラインナップの拡充により塗料周辺事業の成長を加速させるとともに、生産設備能力の拡大 や原材料調達の連携等により効率性を向上」する狙いとあります。
Note 1
Sealants, like sealants and caulking materials, are materials used in construction to fill in joints and gaps in the structure to make it waterproof and airtight.