Swift and effective integration was always the intention when AkzoNobel acquired ICI at the beginning of 2008. A clear strategy had been defined and there was a strong commitment to building one of the world’s leading and most respected industrial companies.
During the first 12 months, the complex process not only went smoothly, but it also developed ahead of schedule, due mainly to precise management of the entire integration program. This rapid success meant that new, more ambitious targets could be set and the company could take greater strides towards delivering on the full potential offered by the enlarged organization.
Within four months, after reviewing the available synergies from the transaction, AkzoNobel announced a revised target – estimated annual pre-tax cost synergies of €340 million per annum (an increase of €60 million, or 20 percent, on the initial estimate). By September 2008, the company had committed to delivering 100 percent of these synergies by 2010.
The scale and nature of the deal also meant that several businesses and product brands had to be either integrated or divested. Again, this was handled quickly and efficiently. The previously agreed on-sale of the former ICI’s Adhesives and Electronic Materials businesses to Henkel was completed by April, while in Q3 it was announced that the intended sale of National Starch would not be taking place in 2008.
In June, AkzoNobel agreed to sell its Para and Crown Diamond decorative paints brands in Canada to General Paint Corp., while in August, an agreement was reached to divest the Crown Paints business in the UK and Ireland and the DeKeyn and Linitop brands in Belgium. These transactions resulted from commitment packages agreed in connection with the ICI acquisition.
By the middle of the year, the former ICI’s Alco and Personal Care activities were well on their way to being integrated into AkzoNobel’s Surface Chemistry business. Meanwhile, the Elotex and Sulfur Products Argentina businesses were successfully integrated into Functional Chemicals, again within the space of a few months.
Effective implementation of dedicated global integration projects has ensured that all aspects of the process have progressed smoothly. For example, the former ICI HQ at Manchester Square in London was vacated by July (with the remaining staff moving to Portland House), while site restructuring programs were underway before the end of Q4. Concerted efforts to maintain the high speed implementation of the integration process will be continued in 2009.
First key supplier savings realized.March
One software platform chosen for all Decorative Paints tinting machines worldwide.April
New AkzoNobel identity and branding launched.
On sale of former ICI’s Adhesives and Electronic Materials businesses to Henkel completed.
Annual synergies target upgraded to €340 million.
Elotex business to be integrated into AkzoNobel Functional Chemicals; Alco and Personal Care activities to be integrated into AkzoNobel Surface Chemistry.June
All top 500 Decorative Paints management appointments finalized.July
ICI HQ at Manchester Square closed and staff moved to Portland House.
First combined Decorative Paints HSE report published.August
First common brand segmentation plans for combined Decorative Paints business started.September
Commitment to delivering synergies of €340 million faster, with 100 percent to be realized by 2010.
Tex Gunning joined the company as Managing Director of AkzoNobel Decorative Paints, succeeding David Hamill.October
First new combined key account agreement secured.November
Site restructuring program in Europe commenced.