Akzo Sends M&A Executives to Turkey to Pursue Takeover Targets

Akzo Nobel NV (AKZA), which provides coatings for the Airbus A380 double-decker jet, is in talks with targets in Turkey to tap a local market growing twice as fast as the country’s economy, according to an executive.

Akzo, which has five factories in Turkey, is considering companies making coatings and paints used in aerospace and anti-corrosion treatments, country chief Feridun Uzunyol said in an interview. Executives from the company’s Amsterdam headquarters are leading the negotiations, according to Uzunyol.

“We’re not targeting large companies in Turkey, we’re looking at mid-sized companies,” Uzunyol said yesterday, declining to be more specific.

Chief Executive Officer Ton Buechner, who took the helm in April, is scheduled to outline his vision for Akzo at an investors’ day next month, with a profit improvement program and emerging market growth expected to take prominent roles in his vision. Closer to home, the Dutch maker of the Dulux paint brand is suffering from the economic crisis and muted construction markets across Europe.

Akzo, which competes with Valspar Corp. (VAL), Sherwin-Williams Co. (SHW) and PPG Industries Inc. (PPG) in the U.S., has climbed 29 percent this year, giving the company a market value of 11.48 billion euros.

Acquisitions spending in Turkey will focus on areas where Akzo isn’t currently active, Uzunyol said. He declined to say when he expects a transaction.

Keeping Pace With Demand

Turkey’s $2.5 billion paint and coatings industry, which grew more than 15 percent in 2011, may expand by 5 percent to 7 percent this year, Ahmet Yigitbasi, deputy chairman of Turkey’s Paint-Makers’ Association, said in an interview yesterday. Turkey and China are among the fastest-growing emerging markets in the paint-making industry as Europe’s share shrunk to 31 percent while Asia’s climbed to 35 percent, Jan van der Meulen, head of the European Paint-Makers’ Association, the umbrella organization for companies in the European Union, said yesterday at a paint fair in Turkey.

Akzo, whose units in Turkey include the Dilovasi-based decorative paint maker Marshall Boya & Vernik Sanayii AS (MRSHL), is also considering investment to expand existing plants in Turkey pending a government incentive package expected to be announced in February, Uzunyol said. It has 865 staff in Turkey, he said.

“The government has taken chemicals as a strategic industry and we are happy about this,” Uzunyol said. “Our growth will be mostly based on sales in the local market, but we’ll also have exports.”

Sales to Double

The Dutch company aims to double annual sales in Turkey of about 300 million euros within five years, he said.

Akzo has about 160,000 metric tons of annual paint production capacity in Turkey and any investment is based on a cost of $2 million a ton, Uzunyol said.

Akzo has plans to buy surplus product from a $5-billion oil refinery project carried out by State Oil Co. of Azerbaijan that will be operational from 2015 in the western port town of Aliaga, Uzunyol said.

The company also plans to reorganize its research and development units in Turkey, Uzunyol said.

Marshall rose 0.6 percent to 49.8 liras at 11:04 a.m. in Istanbul trading.

To contact the reporter on this story: Ercan Ersoy in Istanbul eersoy@bloomberg.net.

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.

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