Kansai Nerolac Paints Ltd said on Tuesday that it has agreed to acquire 55% equity stake in Bangladesh-headquartered RAK Paints Ltd for Rs 45.81 crore (57.26 crore Bangladeshi taka or around $7 million)) in a cash deal.
The transaction, which is aimed at entering the high-growth market in the neighbouring country, comes two months after Kansai Nerolac said it would acquire Indian powder coatings maker Marpol.
In a stock exchange disclosure, Kansai Nerolac said it expects the transaction to be completed by July 31, subject to certain conditions.
RAK Paints, which makes decorative and industrial paints, was established in 2009 in Bangladesh and had a turnover of Rs 81.94 crore as of June 30 last year.
“Our company intends to establish a competitive paint manufacturing business in Bangladesh,” Kansai Nerolac said in the stock exchange filing.
With more two-wheeler manufacturers looking to set up plants in Bangladesh, the deal will help Kansai Nerolac get larger business in the market, according to the company’s vice chairman and managing director HM Bharuka.
Kansai Nerolac is a subsidiary of Japan-based Kansai Paint Company Ltd. As on 31 December 2017, Kansai Paint held 74.99% stake in the company that has four plants in India. The company’s net sales stood at Rs 4,792.19 crore in the financial year 2017-2018 as it turned in a net profit of Rs 513.75 crore.
Asian Paints Ltd is the largest company by revenue in the domestic paint industry. Growth in infrastructure, automobile and real estate will have a positive effect on the overall demand of paints, according to a report last month by brokerage Firstcall Research.
Deals in the sector
In June last year, Kolkata-based Berger Paints India had acquired Saboo Coatings for Rs 81.7 crore ($12.6 million) to boost its industrial coatings business.
Four months before that, Asian Paints agreed to acquire Sri Lanka’s Causeway Paints Lanka to expand its overseas business.