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Akzo to Divest Paint Shops in Germany in Retreat From Retail

June 26 (Bloomberg) -- Akzo Nobel NV, Europe’s largest paint company, plans to sell its decorative paint shops in Germany to help improve returns and competitiveness.

The 72 stores will be sold to independent wholesale distributors, the Amsterdam-based maker of the Sikkens, Herbol and Dulux brands said in a statement today.

“We are changing the marketing strategy of our German decorative paints business to focus on our key organizational strengths of marketing and distributing,” said Ruud Joosten, head of the decorative paints division. “This is part of our ongoing efforts to strengthen both our organizational efficiency and our profitability in Germany.”

Akzo Nobel said a review of its eight offices in Germany will follow. Five years after the $18 billion purchase of Imperial Chemical Industries, Chief Executive Officer Ton Buechner is tackling the complexity of a sprawling company with assets spanning coatings, chemicals and specialty ingredients used in cosmetics.

Akzo shares climbed 0.3 percent to 43.04 euros at 9:24 a.m. in the Dutch capital. They’ve slipped 13 percent this year, compared with a 15 percent advance at smaller Finnish competitor Tikurila Oyj.

Akzo Nobel will choose the most efficient distribution channels instead of having the expense of operating stores that also sold rollers and other products to tradesmen. In December, it sold the 138-year-old Glidden brand to U.S. competitor PPG Industries Inc. for $1.05 billion. The deal transferred about 600 of Akzo Nobel’s own paint stores, giving PPG a retail base of about 1,000 shops.

U.K. Stores

There is no “read-across” to Akzo Nobel’s strategy in other markets where it operates retail chains, including the U.K., where decorative paint shops are performing well, said Stephen Hufton, a spokesman. Germany is more fragmented and overall paint sales in the country won’t be affected by the move, Hufton said.

Akzo Nobel also has paint stores in markets including the Netherlands and France.

The sale of the German chain coincides with the planned sale of a building-adhesives business with annual sales of about 200 million euros ($261 million). Germany generates about 1.3 billion euros in annual revenue for Akzo Nobel.

The Dutch company operates 17 factories in Germany, where it has 3,900 employees.

To contact the reporter on this story: Andrew Noel in London at anoel@bloomberg.net

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

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