In line with its recently announced new `Double Impact’ strategy, supposed to be realised through both acquisitions and organic growth as well as investments, world-leading coatings manufacturer Hempel announced its first major acquisition to gain foothold in Australian market and Asian expansion.

The Danish company signed a purchase agreement for the acquisition of Wattyl, one of Australia and New Zealand’s leading manufacturers of paint for the decorative and protective segments with a turnover of € 150 million and 750 employees.

The seller is The Sherwin-Williams Company, the world’s largest paint and coatings company, headquartered in the US. The transaction is now pending approval from the authorities, which is expected in the first quarter of 2021.

“We are now taking the first large, visible step in our ambition of doubling Hempel by 2025, and the acquisition will have a major, positive impact on our footprint and development in our South & East Asia region,” Hempel Group President & CEO Lars Petersson said.

Petersson: new strategy

“The acquisition is in line with our Double Impact strategy and the growth ambitions for our decorative and protective segments. Furthermore, the acquisition of Wattyl clearly highlights key points of the Hempel strategy: We are going for leadership positions in selected segments and geographies, and we aim to double our revenue within five years to €3 billion. Doubling our revenue will allow us to double our positive impact by investing in more sustainable coating solutions, innovation and digitalisation.”

For more than 100 years, Wattyl has developed innovative and technologically advanced, highest quality, market leading products, building an iconic, trusted brand with high consumer brand awareness. Their business model is similar to the Hempel company Crown Paints in the UK, with a portfolio of branded products and nearly 100 company-owned stores across Australia and New Zealand, and strategic distribution partnerships servicing the DIY and trade consumers.

STRONG PLATFORM

“Hempel and Wattyl working together, not only within decorative paints but also within protective coatings solutions, will put us in a great position to deliver our strategic ambition, particularly in our Decorative, Infrastructure and Energy segments, through combined expertise, industry knowledge and quality products. Consequently, our expectations for Wattyl as part of our family are high, and together, Wattyl and Hempel will create a strong platform for continuous growth for our entire South & East Asia region,” said Petersson.

Going forward, Wattyl will still be managed by current Managing Director Matt Crossingham, who is looking forward to joining the Hempel Group and is committed to the ongoing success of the region.

Crossingham added: “The entire team and I are pleased to join the Hempel family, and we are looking forward to contributing to Hempel’s growth and development – not only in Australia and New Zealand – but throughout the South & East Asia region. We will gain access to increased know-how, experience and innovation as well as a broader product portfolio, which will benefit our customers. With Hempel’s ownership, I am certain that Wattyl will raise to the next level.”

Hempel wants to realise its strategy through both acquisitions and organic growth

Petersson said: “Together with Matt Crossingham and his great team, we will focus on being the trusted partner to all our current and future customers throughout Australia and New Zealand. All of our strategic priorities are about ensuring a better end-to-end solution for our customers. Our customers will experience a continuing focus on sustainability, digitalisation and innovation.”

From a branding perspective, Hempel fully recognises the strengths and attributes of the Wattyl brand. Hempel intends to invest in and further develop these attributes and use the endorsement “A part of Hempel” in branding and communication, as we see ourselves as guardians of strong brands.

NEW STRATEGY

In January, Hempel announced its new strategy that defines the timeframe of a doubling of Hempel by 2025. The path is defined by focus in the entire business, leadership positions in chosen segments, industry leadership in sustainability within those, as well as a strong focus on innovation and digitalisation.

According to Hempel, 2020 has been a year of transition for global coatings supplier. While still securing paint and coatings supply globally in a challenging Covid-19 year and developing core business areas, a new strategy on how to focus the 105-year-old company has taken shape. Now defined as within the next five years, Hempel wants to double revenue through refocused geographical priorities, focused segment leadership positions and M&A, while at the same time accelerating on sustainability, innovation and digitalisation, said Petersson.

“When the world closed down in 2020 and global operations including ours were challenged, we sped up our strategy process. Now we have laid the foundation for not only doubling our revenue but also for significantly increasing our positive impact for our customers, partners and employees. We will build leadership positions and invest in our core segments and put sustainability at the heart of how we do business,” Petersson said.

The strategy will be realised through both acquisitions and organic growth as well as ambitious investments in sustainability, innovation and digitalisation. Hempel expects 50 per cent of revenue growth to come from M&A but the strategy also has a clear-cut emphasis on building market leadership positions in specific areas of our four chosen segments: Decorative, Marine, Infrastructure and Energy. By 2025, we expect more than 50 per cent of our revenue to come from sub segments and geographies where we have a leading position, compared to less than 10 per cent today. 

“We have been spread too thin and too shallow and therefore we focus our business by exiting some geographies by own operation and strengthening others. Alongside that we know that our customers need suppliers with end-to-end solutions and a deep knowledge and impact on the market. Based on this, we have started a transformation of how we sell and develop by building even stronger partnerships with a number of customers to truly understand their needs, future challenges and to co-create differentiated solutions,” said Petersson. 

The new strategy sets ambitious goals on sustainability such as being carbon neutral in own operations by 2025 and also reducing the carbon footprint of our customers. To ensure a rigorous, scientific and well-documented approach to becoming a sustainability leader within the coatings industry, we have committed to science-based targets.

“Putting sustainability at the heart of how we do business will drive change both within Hempel and across our value chain through our products and services. We see sustainability as a key enabler for growth, by helping our costumers reaching their sustainability targets. Our target to double in size in the next five years makes our commitment to sustainability even more important, and we are ready to make some bold decisions as we accelerate,” said Petersson.