Dutch chemical giant and the world's leading paintmaker AkzoNobel announced Monday that it is in merger talks with leading US rival, Axalta, which would bring together two multi-billion dollar companies.

"In response to market speculation, AkzoNobel confirms today it is currently in constructive discussions regarding a merger of the AkzoNobel Paints & Coatings business with Axalta," the company said in a statement.

"This will create a leading global paints and coatings company through a merger of equals," it added.

Bloomberg News said Axalta is the world's leading maker of auto finish paints and "the deal would combine two companies with a market value of about $30 billion".

In past months, AkzoNobel has been fighting a planned takeover by another US rival, Pittsburgh-based PPG which would have valued the Dutch company at 26.9 billion euros ($32.4 billion).

It has rejected three multi-billion-euro takeover offers from PPG, sparking a bitter legal tussle with an activist investor Elliott Advisors which had pushed the tie-up.

Formed in 1994 from the merger of the Dutch and Swedish firms Akzo and Nobel, AkzoNobel has a 46,000-strong workforce and works in 80 countries around the world. Last year, it reported 14.2 billion euros in revenue.

But in April, under pressure due to the increasing hostile PPG bid, the Amsterdam-based maker of such household paints as Dulux and Trimetal announced plans to spin off its speciality chemicals business within 12 months.

AzkoNobel said at the time that it also planned to make 150 million euros in savings through improving efficiency, with another 50 million euros savings from the separation of the chemicals division.

- No definitive agreement yet -

Axalta, which has more than 150 years experience, is based in Philadelphia and employs 13,300 people, with customers in over 130 countries. Last year, it had net sales of $4.1 billion.

In a statement, Axalta confirmed it was "engaged in discussions" with AkzoNobel, but cautioned there were "no assurances that a definitive agreement ... will be reached or on what terms".

It would only go ahead with the deal "if its board of directors determines that it is in the best interest of Axalta to do so".

Markets analyst Laurence Alexander from US global investment bank Jeffries said a merger would be "a bold move with a good strategic fit that would also strive to maintain AkzoNobel's independence".

But he cautioned in a note that negotiating with Axalta before the spin-off of the specialty chemicals division "adds complexity".

The markets reacted coolly to the news of the possible tie-up Monday, with AkzoNobel shares falling 0.49 percent in early trade to 77.10 euros at 10:45 am (0945 GMT).

The Dutch trade union CNV also said it would be seeking an explanation about the merger talks.

"I would like to hear about what is happening here. As it is also not clear what are the consequences for its activities in the Netherlands," said CNV leader Arthur Bot, quoted by the Dutch news agency ANP.

Source:AFP