What's going on?

According to news reports out late on Tuesday, Nippon Paint Holdings, the largest paint producer in Japan, is in talks to buy US firm Axalta Coating Systems � a deal that�s reported to be worth well over $8 billion. Glossy.

What does this mean?

The deal is only the latest development in a long-running saga of tie-ups in the chemicals and paints industry � including the massive $130 billion merger between Dow and DuPont completed earlier this year.


What�s especially interesting about Nippon Paint�s proposed purchase of Axalta is that it papers right over talks on a merger-in-progress between Axalta and the Netherlands� Akzo Nobel, which started last month. Nippon Paint apparently made a better offer that Axalta just couldn�t refuse: an all-cash deal to take over the company.

Why should I care?

The bigger picture: Some are wondering what�s next for Akzo as the industry continues to consolidate.

After Akzo slapped down three separate takeover bids from US paints giant PPG earlier this year, it promised its shareholders that it could perform better without PPG. Merging with Axalta might have proven them right, allowing the combined company to buy raw materials in bulk and market a larger product line-up to an expanded customer base (so-called �synergies�). However, Akzo wasn�t able to pull this one off, and as more paint mixtures (like that of Sherwin-Williams and Valspar) fill the palette, some are wondering if the stage is set for PPG to swoop back in from the wings with a fresh takeover offer for Akzo (tweet this).

For markets: Axalta�s stock jumped by nearly 20% back in October when news broke that the company was in merger talks.

The stock likely rose because shareholders in a company that undergoes a merger or acquisition are usually bought out at a premium to its market price. With sources confirming that Nippon Paint has offered to buy Axalta at a premium to Monday�s share price, recent investors who bought up the stock clearly picked the right colors!