Ariel International Fund on Akzo Nobel N.V.
Thesis
Ariel bought Akzo Nobel ahead of its combination with Axalta, believing skepticism around the deal has created undervaluation. The companies have complementary coatings businesses with opportunities to eliminate duplicated costs and improve procurement. Governance changes are intended to align management and shareholders more closely. Stabilizing European home improvement and a recovery in North American auto refinish demand could add an operating tailwind to merger synergies.
“the combined company's earnings potential is worth more than the market assumes.”
Key risks
- Regulatory approval for the proposed Axalta merger remains outstanding
- Investors question the strategic rationale and whether cost synergies are achievable
- Recovery in European home improvement and North American auto refinish may be uneven