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Investing.com-- Dutch paints and coating giant Akzo Nobel NV (AS:AKZO) announced on Friday it will sell its stake in an Indian unit to conglomerate JSW Group for about 1.4 billion euros ($1.64 billion), and will deploy part of the proceeds towards a buyback.
Akzo sees net cash proceeds of about 900 million euros from the sale, of which 400 million euros will be deployed towards a share buyback program after the closing of the deal. The remaining 500 million euros will be used for deleveraging, Akzo said in a statement.
"Following the divestment, Akzo has pre-buyback net debt/EBITDA of 2x (post-buyback 2.3x)," Jefferies analysts noted.
"We estimate the divestment is 1% EPS-accretive (after accounting for the buyback). The net cash proceeds and buyback amount appear at the lower end of market expectations," they added.
Azko will sell up to 75% of its shares in Akzo Nobel India Ltd (NSE:AKZO), with the sale including the company’s liquid paints and coating business in India. The Dutch firm will retail its full ownership in its India powder coatings and international research center.
Akzo Nobel India’s shares surged 7% in morning trade following the announcement.
The sale is a “first step” in Akzo’s strategic portfolio review announced in October 2024, which is aimed at improving the company’s capital structure.
Akzo sees the transaction being completed by the fourth quarter of 2025.
(Ambar Warrick contributed to this report.)