Japanese, Osaka-based chemical company, Kansai Paint has today agreed to the acquisition of East african biggest paint company, Sadolin group with operation in Kenya, Uganda, and Tanzania through its subsidiary Kansai Plascon Africa in Kenya as part of its effort to boost its presence in Africa’s growing paint market.
The acquisition estimated at more than US $100 million, Kansai is optimistic the Sadolin deal will reinforce its foothold in Africa. Some observers aware of the deal, believe the deal could be worth much more.
The deal brings it to four companies Kansai paint have acquired in the last 5 years, which include South Africa’s Freeworld Coatings, Zimbabwe’s coatings market leader Astra Industries, and Zimbabwe’s coatings market leader Astra Industries.
Today, the Japanese company holds an approximate 40% share in Africa’s construction-paint market. By ongoing insistent investment in the region, Kansai Paint intends to boost African sales to at least $55 billion yearly by fiscal 2018.
Following the slowing growth in Japan, Hiroshi Ishino, president of the Tokyo-listed Kansai Paint since 2013, has promised to expand the company through acquisitions into one of the top three coatings groups in the world.
Farid Masood, chief executive of Kansai Plascon, said the company was “very optimistic on the African growth story”.
“We’re looking at Africa’s growing middle class, increased infrastructure spending and the paint business is relevant across all sectors,” he said. “Yes, there will be short-term hiccups but we’re in for the long haul.”
Kansai Paint is a Japanese company, whose major products are automotive, industrial and decorative coatings, will use Sadolin already established 50% market share to diversify away from auto-coating and into areas such as paints for trains and industrial machinery, which are strong growth areas in emerging economies.
After failed attempt to acquire three east African companies in the past Massod claimed that the deal is a big announcement to Japanese dreams of competing with China favorably in Global world market.
The acquisition comes as Shinzo Abe, Japan’s prime minister, looks to raise Japan’s profile in Africa, particularly in the face of increasing Chinese competition. He led a business delegation to Nairobi last year for a Japan-Africa conference and promised tens of billions of dollars of investment.
Aly-Khan Satchu, an investment consultant in Nairobi, predicted “more of this kind of activity” in the region. “A lot of family-owned businesses have maxed out and need investment to take them to the next level,” he said.