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Investing.com -- The proposed $25 billion merger between Akzo Nobel NV (AS:AKZO) and Axalta Coating Systems Ltd (NYSE:AXTA) is facing rising shareholder scrutiny, with two major Axalta investors, Artisan Partners and Shapiro Capital Management, now publicly opposing the all-stock deal that would form a global coatings giant with roughly $17 billion in annual revenue.
Artisan Partners, an estimated 0.7% holder of Axalta stock, issued the first major challenge earlier this week, questioning the valuation, governance structure, and whether Axalta is receiving fair consideration in what AkzoNobel characterizes as a no-premium, merger-of-equals transaction.
Shapiro Capital followed, saying it is “very disappointed” with the agreement. In an interview with The Wall Street Journal, President Louis Shapiro argued that Axalta investors “should get the premium they deserve,” adding that the firm, a top-25 Axalta shareholder with a 1.1% stake, will vote against the merger unless terms are improved or alternatives are explored.
The two stand in contrast with Cevian Capital, which has thrown its support behind the proposed combination, saying the deal reflects the “significant value potential” tied to consolidation in the coatings and paint industry, according to reporting from Bloomberg. The activist investor previously built up a roughly 5% stake in Akzo Nobel.
Deal Structure and Terms Under Fire
Under the current terms, Axalta shareholders would receive 0.6539 AkzoNobel shares for each Axalta share, leaving them with 45% of the combined company. AkzoNobel shareholders would hold 55% and receive a €2.5 billion special dividend prior to closing.
AkzoNobel CEO Greg Poux-Guillaume noted on the analyst call that the agreement was intentionally designed as a no-premium, MOE structure, an approach increasingly at odds with shareholders seeking a control premium.
Companies Defend the Merger to Investing.com
In response to shareholder pushback, both companies defended the transaction in statements to Investing.com.
AkzoNobel said the merger “will create a leader in paints and coatings with a highly attractive financial profile, industry-leading innovation and unparalleled global reach,” adding that the deal is “rooted in clear strategic and financial logic” and will create significant value for both sets of shareholders.
Axalta emphasized the synergy opportunity, saying: “We are confident that our pending merger with AkzoNobel represents the best alternative to drive substantial long-term growth and value creation for Axalta shareholders through approximately $600 million of actionable run-rate synergies.” The company added, "We look forward to continuing to engage with our shareholders.”
What Management Highlighted on the Call
On the post-announcement call, executives outlined:
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~$600 million in actionable run-rate cost synergies, with 90% expected within three years
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A global footprint of 173 manufacturing sites and 91 R&D centers
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A combined workforce of 4,200 scientists and engineers and ~100 brands across industrial, refinish, mobility, aerospace, marine, powder, and decorative markets
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Expected $3.3 billion in adjusted EBITDA, 20% EBITDA margins, and $1.5 billion in adjusted free cash flow
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A closing timeline that could extend into late 2026 or early 2027
Management argued the combination offers scale and innovation neither company could achieve independently, as the two seek to compete with coating industry leaders PPG Industries Inc (NYSE:PPG) and Sherwin-Williams Co (NYSE:SHW).
Growing Resistance Ahead of a Pivotal Vote
With both Artisan and Shapiro now opposed, Axalta’s board is navigating increasing pressure from shareholders who argue the company is being undervalued, and who may push for renegotiated terms or a broader sale process. The vote, expected next year, is shaping into a major test of whether the companies can secure investor buy-in for one of the coatings industry’s largest-ever mergers.