Note 2: Scope of consolidation

Material subsidiaries

The Consolidated financial statements comprise the assets, liabilities, income and expenses of 251 legal entities. Due to a legal entity reduction program, focusing on merging entities and liquidating dormant entities, we expect the number of legal entities to reduce in the coming years. We consider legal entities material when they represent, for at least two subsequent years, more than 5% of either revenue or operating income. Material subsidiaries included in the table below are fully owned at year-end 2022 except for Akzo Nobel India Limited, refer to Note 18 for an overview of non-controlling interests.

Acquisitions

On April 22, 2022, AkzoNobel acquired 100% of the shares of Colombia based paints and coatings company Grupo Orbis S.A. (Grupo Orbis) for €566 million. The acquisition strengthens our position in Latin America. The transaction includes eight operational manufacturing sites. Since its acquisition, Grupo Orbis contributed €336 million to revenue and €29 million to operating income. Based on financial information received from the acquiree, revenues for the period January 1, 2022 until the date of acquisition amounted to €123 million.

Based on the provisional purchase price allocation, the transaction resulted in €262 million of goodwill (non-deductible for tax purposes), €259 million of other intangible assets and €121 million of property, plant and equipment. The purchase price allocation will be finalized before April 21, 2023. No material changes from the current purchase price allocation are expected.

The purchase price allocation was performed using the implied internal rate of return on management’s forecasts. An assessment of the assumptions applied in estimating such forecasts was made, including potential synergies that are expected to be realized as a result of the transaction.

The goodwill is mainly attributable to synergies expected to be achieved from integrating the company into the group. The paints business of Grupo Orbis is being integrated in business unit Decorative Paints Latin America. The coatings businesses ultimately will be incorporated into the respective Performance Coatings business units in 2023. For the interim period, in 2022, these businesses are reported in business unit in Performance Coatings Other.

On December 1, 2022, we acquired the wheel liquid coatings business of Lankwitzer Lackfabrik GmbH for €36 million in an asset deal. The provisional purchase price allocation resulted in €7 million of goodwill (deductible for tax purposes), €17 million of other intangible assets and €14 million other fixed and current assets. The goodwill is mainly attributable to synergies expected to be achieved from integrating the company into the group. The purchase price is provisional due to the limited time between the date of acquisition and the reporting date. The contribution of the Lankwitzer business to the 2022 statement of income is not material. This business is being integrated in business unit Powder Coatings.

On June 1, 2022, AkzoNobel announced the intended acquisition of Kansai Paint’s African paints and coatings activities. The intended acquisition is expected to further strengthen our activities in the region and provide opportunities for future growth. The acquisition is expected to be completed in the second half of 2023.

On March 1, 2021, AkzoNobel acquired 100% of the shares of Industrias Titan S.A.U. (Titan Paints) in Spain, for €83 million. The acquisition strengthens our paints business and footprint in Spain. The transaction included three production facilities and seven logistics and service centres for decorative paints. Based on the final purchase price allocation, the transaction resulted in €16 million of goodwill (non-deductible for tax purposes), €20 million of other intangible assets and €47 million of property, plant and equipment. The goodwill is mainly attributable to synergies expected to be achieved from integrating the company into the group. Titan Paints is being integrated in business unit Decorative Paints Europe, Middle East and Africa.

Divestments

In 2022 and 2021, no significant divestments occurred.