Osaka-based Japanese paint and coatings manufacturer Kansai Paint has announced plans to acquire paint maker, Sadolin Kenya.
The company’s South African subsidiary Kansai Plascon Africa is also preparing to acquire Sadolin Uganda and Sadolin Tanzania. Although the transaction price was undisclosed, persons familiar with the regional operation estimated it at $125 million (Sh12.5 billion).
The Tokyo Stock Exchange-listed firm that employs nearly 12,000 workers has been operating since 1918 and has subsidiaries in several countries.
“We will release details of the development soon,” said Jamil Virjee managing director, Sadolin Paints Kenya when contacted by the Business Daily. He declined to divulge further details of the sale deal ahead of the official communication date.
However, Financial Times of London estimated the combined revenues at the East African companies, which are owned by members of a certain community, at $87 million (Sh9 billion) as at 2016.
The three companies pay royalties to the Sadolin Group, owned by Dutch multinational Akzo Nobel, to use the name.
The three firms focus on interior paint and mainly serve their respective countries. They employ about 700 people. The move is expected to give the Japanese firm a foothold in East Africa (EA).
The purchase is also said to be part of Kansai’s strategy to diversify away from auto-coating into areas such as paints for trains and industrial machinery, which are strong growth areas in emerging economies.
Amid slowing growth in Japan, Hiroshi Ishino, president of Kansai Paint since 2013, has promised to expand the company through acquisitions into one of the top three coatings groups in the world.
A construction boom has led to the expansion of the paints industry in Kenya.
According to global growth strategy analyst Frost & Sullivan, the mushrooming of housing complexes, office buildings and shopping malls in Kenya has increased the need for decorative paint and coatings.
In turn market players have been keen to capitalise on the boom.
Analysts further project that because of rapid urbanisation, the domestic construction industry will soon begin competing in the global arena, creating significant demand for better quality decorative paints.