Nippon Paint, Sherwin-Williams end takeover pursuit, AkzoNobel shares tumble

By Dimitri Rhodes

TOKYO/GDANSK, June 3 (Reuters) - Nippon ‌Paint and ​Sherwin-Williams have ​terminated efforts to jointly acquire rival paint maker AkzoNobel, they said on Wednesday, sending the Dulux maker's shares 19% lower.

The Dutch ‌company's shares were at the bottom of Europe's STOXX 600 ⁠benchmark index and on track for their worst-ever trading day as of 1105 GMT.

"A lot ‌of people may have thought ‌that another offer from Sherwin-Williams and Nippon Paint would be forthcoming," Berenberg analyst Sebastian Bray said.

The companies' decision to walk away followed AkzoNobel's rejection ​of their €12.5 billion ($14.5 billion) cash takeover offer last week.

Paint makers are seeking mergers to save money in the face of rising costs, intense competition ⁠and the uncertainty created by U.S. President Donald Trump's tariffs on imported goods.

AkzoNobel said in a press ​release that both its boards unanimously continued to recommend its planned merger with U.S. coatings maker Axalta.

It had previously said ​the takeover offer lacked certainty regarding regulatory ‌clearances and would have split the company between the two suitors.

"AkzoNobel's board clearly felt valuation was a major factor in ⁠rejecting two offers for the business, backing its own strategic push to buy Axalta," John West, global analysis lead at Mergermarket, told Reuters.

Bernstein analysts last week estimated that ⁠for AkzoNobel to engage with an offer, the suitors would likely need to fork ​up more than €78 per share, well above the €73 tabled by Nippon Paint and Sherwin-Williams.

Moody's meanwhile said that even the rejected bid may have stressed Sherwin-Williams' investment-grade rating, as its ‌portion would likely have been financed mostly through debt.

"In my view, Nippon and Sherwin both have a reasonable amount of ‌debt right now and Nippon especially might get a bit uncomfortable with the ⁠leverage if they were to ‌push the deal," Bernstein analyst ​James Hooper said on Wednesday.

($1 = €0.8610)

(Reporting by Kantaro Komiya in Tokyo and Dimitri Rhodes in Gdansk; Editing by Jacqueline Wong and ‌Milla Nissi-Prussak)

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