Axalta shares further details on merger with AkzoNobel during earnings call

Axalta leaders shared further details on its merger with AkzoNobel on Tuesday during its Q4 2025 and full-year earnings call with investors.

In November, the companies announced a definitive agreement to combine in an all-stock merger of equals, creating a “premier global coatings company” with an enterprise value of $25 billion, according to a press release shared at the time.

The companies said coming together will “better serve customers across key end markets and enhance value for shareholders, employees, and other stakeholders” through complementary portfolios of highly regarded brands.

On Tuesday, Axalta President and CEO Chris Villavarayan said investor sentiment on the merger continues to improve and has been largely positive.

“We’ve been talking to all our large investors on both sides — Greg, Rakesh, myself, Carl — we’ve spent a lot of time working with our investors, our long-onlys, and we’ve also seen new folks come into the story,” he said. “Overall, the sentiment is moving. We still have, obviously, a lot of work to do as we head into the vote, but at this point, our conversations are trending the right way. And I would say I’m very pleased with where we’re going.”

Axalta Senior Vice President and Chief Financial Officer Carl Anderson noted two points regarding the deal that he said are beginning to resonate with the investor community.

“One, we are creating the largest global performance coatings company,” he said. “We’re creating the second-largest paints and coatings company. We’re going to have three times the revenue, three times the EBITDA, and greater than three times the free cash flow on a combined enterprise.

“We are very excited about what this does, not only for the financial aspects, but also as we think about our customers, we’re going to be operating in several different end markets from Refinish to Marine, to Industrial, to Aerospace, and we have leading positions in our products and all the customers we serve. I think that will be the message. I think the synergies, as Chris articulated, we feel very, very strong and very comfortable with. And we also believe there’s upside as we think about the revenue synergies that this deal provides.”

When asked how the merged company’s Refinish strategy might evolve through maintenance-of-effort, Villavarayan called it “one of the great stories of the combination of companies.”

“If you think about the merger of both companies, and this has obviously been looked at before, the greatest aspect of these two companies coming together is the complementary nature of it,” he said. “And if you really look at the perspective, whether it’s in Refinish or in Mobility or a little bit in Industrial, we’re absolutely complementary, and it’s just a great story.”

Villavarayan added that in the Refinish segment, Axalta is stronger in premium, while AkzoNobel is stronger in economy. Across the board, the companies’ joint distribution of putties and fillers makes about 1-2% of the merged company’s revenue opportunities, he said.

“What we can provide our customers — the ability to have one point of sale to bring together the products that they’re getting from two different folks at this point — is just a great story,” he said. “When you come into the two strong geographies of Europe and North America, we have complementary products that I think really enable us to grow.”

The complementary nature of the companies’ operations and products creates the least amount of disruption, Villavarayan said. He noted that the joint company has over 3,500 patents with almost 3,000 engineers.

Axalta’s Q4 net income was $60 million, down from $137 million in Q4 2024, driven primarily by higher tax expense and $21 million in transaction costs, primarily related to the announced merger with AkzoNobel.

Axalta also shared with investors that it ceased buybacks following the merger and is putting its capital allocation toward debt reduction.

Together, Villavarayan said the companies expect to “create a global leader with phenomenal scale and end market diversification, significant free cash flow generation, EBITDA margins approaching 20%, and an investment grade credit rating and balance sheet flexibility.”

Additionally, $600 million in synergy potential has been identified, he said.

“Based on our joint track record, I’m confident we will deliver this,” he said. “The combined company will be listed on the New York Stock Exchange and will be a global performance coatings leader. This merger is more than a strategic milestone. It is a catalyst for unlocking powerful new growth vectors, fueled by the combined strength of our shared innovation engines and a commitment to delivering superior value creation. As we step into 2026, we do so with a strong balance sheet, an agile operating model, and a clear focus on our priorities.

“Our teams have consistently demonstrated the ability to navigate complexity and deliver exceptional performance. I am confident that we will create sustainable value as we look ahead to completing the merger with AkzoNobel.”

Axalta and AkzoNobel recently told Autobody News that, until the transaction closes, which is slated for late 2026 or early 2027, the companies will operate independently, sharing that “nothing will change in terms of how they work with suppliers and business partners,” according to the article.

“The Axalta spokesperson added that they will continue building on their existing plans,” Autobody News reports. “‘This means there are no immediate impacts for Axalta customers, and current pricing and distribution structures remain unchanged,’ he said.”

The article adds that AkzoNobel’s spokesperson stated the company will “continue to deliver the quality products our customers have come to expect.”

Axalta Refinish

In 2025, Axalta reported adding over 2,800 body shops and growing adjacencies by $25 million. Anderson said that normally, Axalta adds around 2,200 to 2,500 shops per year.

In a Tuesday press release, Villavarayan said Axalta delivered record earnings in 2025, “demonstrating the resilience of our business and the successful execution of our 2026 A Plan in the midst of a challenging macro environment.”

During the call, he shared that global Refinish activity is running mid-signal digits below Axalta’s expectations.

“This shortfall is compounded by distributor consolidation in North America, which has created near-term volume pressure as the channel rationalizes inventory,” Villavarayan said.

Refinish net sales decreased 7% to $509 million in Q4, reflecting ongoing low levels of claim activity and adjusted order patterns as North American customers manage their working capital.

“We expect pressure from distributor order patterns and Refinish, as well as continued softness in Industrial and Class A commercial vehicle production, to start the year,” Anderson said. “However, as we move throughout the year, we believe several catalysts, including interest rate reductions, easing insurance costs, higher used vehicle prices, higher Class Eight production, and anticipated benefits from tax reform, will take hold, creating a supportive backdrop for the second half.”

Axalta expects North American inflation impacts to be more manageable this year, supporting a second-half increase in repairable claims. For 2026, Axalta is planning for a positive price mix and higher volumes in the second half.

Axalta’s adjusted EBITDA in Q4 was $272 million, down slightly from last year and lower than guidance expectations as December volumes in both Refinish and Industrial came in lower than anticipated. Adjusted EBITDA margin expanded 50 basis points year over year, driven primarily by strong mobility results and lower costs.

Villavarayan said claims are down 1-2%, which has been the average, and miles driven continue to tick up 1-2%.

“On top of that, the great news is certainly what’s happening with the insurance rates,” he said. “Insurance rates, if I go back to ’23 and ’24, we’re just going up at like 18%. And what we can certainly see in the back half of ’25 and ’26, is we can start coming back to the normalized levels we saw, let’s call it ‘pre-pandemic’ or ‘mid-pandemic,’ which is a really good sign here.

“Consumers are starting to really shop their insurance premiums, and they’re starting to add back collision. We’re certainly seeing that benefit, as well as new car pricing going up, and used car pricing going up is also going to be a positive trend.”

Villavarayan added that the company predicts the overall trend going into Q2 is “trending the right way.”

Images

Featured image credit: Maks_Lab/iStock