Hello, and welcome to the ExxonMobil Investor Update Call. Throughout the call, all participants will be in a listen only mode. Today, I'm pleased to present Lloyd Midwinter. Please go ahead with your meeting.
Hello, and welcome. I'm Lloyd Midwinter, Director of Communications and Investor Relations at AkzoNobel. Today, our CEO, Thierry Van Lanken, will briefly outline AkzoNobel's recent announcement and then take some time to answer your questions, together with our CFO, Martin de Vries. For additional information, please contact Agnes Novell, Investor Relations.
Thank you, Lloyd. Thanks for joining everybody. First of all, best wishes for the New Year in 21 and hopefully things normalize on the pandemic area during the year. So definitely stay safe and stay healthy. As you've seen today, we made a proposal to acquire the Finnish company, Tekerula, and create thereby a superior and value for all stakeholders.
The proposed combination of the 2 companies would create a very strong platform for future growth in that sub region be better able to serve the customers with more innovative and sustainable solutions and also building very much on a Northern European heritage. The proposal of €31.25 per share or around €1,400,000,000 represents a premium of 113 percent to Ticarilla's volume weighted average share price for the undisturbed 3 month period ending December 17, 2020. And it is 13% higher than the current offer that was made on January 5, 2021. The natural combination of Axle Mobility, Kurella would build on centuries of industry experience in both companies to create a really significant value for customers, employees, shareholders and all stakeholders. Bringing together our premium decorative brands and leading portfolios would really provide customers with a wider range of innovative products and services, including the most sustainable paint and coatings solutions out there.
To obtain merger clearance and ensure We have agreed with Hempel key terms for the sale of assets, including our decorative paints business of AkzoNobel In the Nordics and the Baltics, the Nordic culture and the strong presence of Ticarilla in Finland would continue to be reflected also in our combined organization. The main offices and production facilities of Tekerila in Finland would become the vital hub in the Baltic Sea region and substantial investment would be made in production facilities to supply future growth. Employees and management would benefit from new and exciting career and professional development opportunities in Finland and the wider organization, all within a European company context. AkzoNobel and Ticarilla have a common approach to sustainability. It's embedded in the way we operate on both sides, and we are widely recognized as the leader in the paints and coatings industry also on that front.
Joining forces would build on the sustainable purpose of Ticarilla and continue to make a difference for all stakeholders, including local communities. Our complementary geographic profiles would create superior value compared to any other combination, including growth opportunities for the company and its employees. In our collective procurement capabilities, Expanded production and combined sales and distribution channels would deliver substantial value creation. The transaction, as proposed, is expected to be EPS accretive in 2022. It is aligned with our Allocation priorities we indicated later earlier and will be financed using existing cash and credit lines.
We will continue our current €300,000,000 share buyback program and maintain our target leverage ratio of 1 to 2 times Net debt over EBITDA. Axolobel and Zicarilla would have an exciting and sustainable future together, continuing the recent positive momentum and performance improvement as a global frontrunner in the industry. Martin and I would hereby be very happy to answer all of your questions.
Operator, please start the Q and A session.
Thank you. Our first question comes from the line of Gunther Zechmann from Bernstein. Please go ahead.
Hi, good morning, gents. Can I just ask two questions to start, please? One is on the antitrust side. On the Deco side, Seems pretty straightforward. On the industrial paint, 17% of the Gorilla sales, do you expect Any concerns on the wood industry and on the protective coatings where you'd also have to make some divestments?
And then the second one, you say You expect the deal to be EPS accretive by 2022. Can you share the assumptions that you use In your merger models or acquisition models to get to that equation, please? And can you also Thank
you. Gunther, thank you For your question, the answer on your first one around are there any potential antitrust issues on the Performance Coating side, the answer is no. It wouldn't change any of those positions. So that is not an issue that we had to deal with. So it's a short answer, but I think it probably answers your question.
2 on the EPS accretion, before I hand it over to Maarten to get you there, I just want to put a context of the offer If you look at alternative combinations versus an AkzoNobel particular, there is 2 sets That we have to look at. 1, since we do take the measures on the that would allow high deal certainty, it's mostly situated or It's all situated in the what is Ticarilla calls their region West. So that's the Baltics, the Nordics as we have announced. There, we would have the optimizations similar to what other offers could be making. It's around the raw materials.
It's around the embedding in our SAP For HANA, which is together with the SAP platform from Ticorilla, is the normal efficiencies. There is actually, Since the Cruella has a pretty nice logistics setup in Scandinavia and the Nordics, but also in the Baltics, It will also basically enable part of our Performance Coatings to go to that channel. So in that sense, it's pretty similar. What we're very excited about is the other 50% of the company. That is basically countries outside, I would say, the Nordics and the Baltics, where we do have very strong combinations either by having Smaller market positions of Ticarilla being embedded in our significant market position, so that gives immediate efficiencies similar to what we've seen with the Fabio In Romania or at Tietam in Spain, etcetera.
So there, in fact, we not only have the, I would say, traditional ways of creating value, But it was really market wise, offering wise, how we task the joint production facilities we have, there is actually significant step up. So That actually has been the background of the calculation, which has really been very, very disciplined here. But Martin, you can probably address specifically the EPS question.
Yes. So to build on what what Xavier said, we've spent ample time to really detail out The business case for this potential transaction, Indeed, looking at the on the one hand, the overlaps in the antitrust, potential antitrust issues, which Sherry just mentioned, But also the potential value creation and the potential efficiencies and leveraging indeed our systems, our processes, but also the grow opportunities in the different products and the distribution channels. So from that perspective, I think there are 2 areas to look at. It's indeed the EPS accretion, As just mentioned, but also the overall value creation. And if you look at the value creation, we believe that from a midterm Active and that is kind of in the 3 to 5 year period.
This is value creative for us. So and maybe to add maybe from a multiple perspective, because it will come up Probably also in the call, from a multiple perspective, if we take the total business case, including the potential synergies, We see that this deal is below our current auction Nobel multiple.
Does that answer your question, Gunther?
Maybe you can comment on the deal Reich as well, please.
On the one?
The return on capital?
Yes. On the return on capital, that is just what I mentioned, so from a midterm perspective, the 3 to 5 years, we see this as value creative. So we've basically looked at all the different areas from a multiple perspective, from a value creation perspective, of course, Effective to work this out in highly detailed level.
Okay. Thank you.
Okay. Thank you, Vincent.
And the next question comes from the line of Peter Clark from Societe Generale. Please go ahead.
Yes. Good morning, everyone. Clearly, a rarity value with this But I'm just wondering, your multiples now pushed up beyond Valspar close to Dulux Group, I think higher on an EV Edit. So clearly, a lot of this is going to be about growth because I think you've indicated on the cost savings, you get raw materials a bit of overlap, but This is more about a growth story. I'm just wondering if you can go through how you see the growth here, perhaps overlapping with your Performance Coatings portfolio, Obviously, with the emerging markets exposure, etcetera, so more on the growth side.
Thank you.
Yes. Peter, thank you very much. But I have to Correct you here. There is really no rarity value that we put in there. It is really a very dry spreadsheet on what we really see as Clear, not just made up, but clear efficiencies we see in the logistics.
Hopefully, the answer on the previous question made it clear that For, I would say, about half of the revenue of Ticorilla, we should be able to make a similar offer as anybody else. We do have much more Of our Performance Coatings that in the Nordics and the Baltics would benefit from having a stronger local Presence there also in the warehousing, logistics, etcetera. So that's it. But if you go to the other 50% of what is currently Ticarilla, I would stand I would actually want to correct you that this is not only based on over enthusiastic growth situations, it is actually around really Drive boring but pretty obvious efficiencies. Russia is being a good example of that.
The China business, I mean, we talked about 50% of the business that really drives the efficiencies. And therefore, again, this is not around trying I'll bid anybody. This is not around the rarity value. This is really a dry spreadsheet that gets us there. And hopefully, In the last few years, we made it sure that's or made it clear that is how we take the decisions.
This is not around size or anything. But talking about the growth opportunities, I'll give a couple of examples. First of all, if you look at the Nordics and the Baltics, first of all, Ticarilla has a very Strong position there. We have good positions there, but obviously, they have higher market shares, and therefore, that allows much more ways Actually have other parts of our offering, our distribution, wood coatings business, for example, to go along where we have a strong position in other parts of the globe. But if you then go to and I give just some concrete examples.
Tigorilla have a pretty nice Positioning for a small part of their portfolio in China, but it is as a premium brand that goes completely alongside its product that actually gets Distributed over thousands of miles before it gets to China, but we have a big organization. We are alongside. We have production facilities in numerous production facilities In China, so that's clear if you want to talk about growth opportunity. The same is in Russia, sizable country where we have very good qualitative business And we see the same, in fact, for Ticarilla. If you now can put in the distribution channels, the sales channels, That combined offering, you really get, 1st of all, in a much more efficient spread across Huge country, but you also can just tailor your offerings much more to medium, premium, etcetera.
So these are I can I assure you these are not just wishful thinking because we want to grow, because it doesn't necessarily such a big growth add to the company? It really for us is similar as what we did with Fabry in Romania or the other acquisitions we did. It's in some of these regions, we may be the bolt on or they may be the bolt on in us and hence create much more value. We do believe there's going to be growth, but it's actually much more based on demonstratable Operational efficiencies in the whole area. Does that answer your question, Mal?
Yes. You made it very clear on the cost side. Can I just ask the specific question? Would raw material savings be the biggest part of that cost side? Or do you think other things together would be at least as big?
I think the raw material efficiencies would be a good part of it, but there are significantly more. I mean, again, Want to point out we have systems that are now completely compatible. Just want to point out that for the whole region that we talk about here where Ticarum is operating in, We actually went months ago to SAP S4HANA. So we have the most unified but also the most advanced system. Logistics is a very big part of it.
Transporting through difficult geographies and big geographies It's another a big other part of it. So I would say, RASA, probably half ish of what I would see as efficiencies, But not much more than that.
Okay. Thank you.
Yes. Go ahead. Thanks.
The next question comes from the line of Charlie Webb from Morgan Stanley. Please go ahead.
Good morning Thierry, Martin and Lloyd. Thank you for the time to ask some questions. Just kind of following up on the ones being asked, but is there any chance you can provide some sort of scale Of the proposed asset that you would look to divest, just kind of order of magnitude maybe at a sales level. And then maybe second question just around synergies. As we think about as you laid out, obviously, a very complicated process, lots of different moving parts that Come into this, but how again, what order of magnitude type of synergies would you expect from such a deal?
How does this compare to other coating fields? Mode. And then lastly, just on that cost of capital returns question at the start of the call. Just over what time period did you say it would
1 by 1, and then Martin, you may comment on the last one. On the size of the divestiture, we would actually prefer not to comment on that, Because frankly, it is dependent on a variety of scenarios. And it's also, I think, would not be fair. This is actually between the Hempel Company and us. It would not be fair to give details at this specific time.
I'm sure that you can do your triangulation to get a feel for it, but there's obviously different scenarios. So I would actually decline to comment on that. On the synergies, you talked about the synergies for the deal from us with Ticarilla, I presume. Charlie?
Yes, yes. Just to dig over that, yes, to kind of as a sense
of sales or some sort of order management. Well, I think I wouldn't necessarily go to percentage of sales, but I hope that the description I gave in the answer of the previous question says that the baseline would be the same for any other offeror that would come in. But in addition to that, for about half of the revenue for Ticarilla, And I described it in the countries that are outside of the Nordics and the Baltics, we are obviously the ones that can create much more Value, and this is around efficiencies or whatever you want to call it. So I would decline to give a percentage on that since we're still at a very early phase in this process. But I can assure you and then I'll hand it over to Maarten that if we walk to that and this is not just Stuff that has to go from one region to another.
If you just look on the ground, our business case makes a lot of numerical sense As have we brought forward, and by the way, we will only be engaged in this as long as it makes numerical sense for us, just as a
caveat upfront. Tanja, your question on value creation, and I mentioned it earlier, we basically the value creation aspect It's in the midterm, and you should think of a period of 3 to 5 years.
Charlie, does that answer your questions?
Yes. That's right. Just maybe one following up on that point. You just mentioned you'd stay in the process as long as it made financial sense. What are your expectations here?
Clearly, it seems like there are potentially multiple parties involved. And as So your price now comes in ahead of PPG's second raised offer. Do you expect this process to continue to be competitive? Or do you think You offer enough in terms of, as you say, perhaps stuff that's not just financial that makes it more attractive to Tigarina and their shareholders?
Charlie, I think we made a rational offer. Besides all the soft elements, it's a very, very rational financial offer for us and we believe for Ticarilla. By the way, Maarten would not allow me to do anything that it smells like irrational. That also means that we very much know what the value is of the asset for us that we can create reels, so not just fluffy stuff that we have around it. And we will be engaged in the process unless that continues to be true.
And then it's actually up to Picariell on how they position themselves around it.
Okay. Thank you very much.
Thank you, Chani.
And the next question comes from the line of Mubasher Chaudhry from Citi.
Just a quick one on your comments around You take a real position in China. Is that large or sizable enough to kind of push you up the rankings within China for your market share or is that quite a small position compared to your own position? Is there some context around either your position or their position And how that kind of moves your footprint within China, Deco would be really helpful. Thank you.
Well, I think probably have to see the more detailed data we assess. It's actually a mid single digit percentage, but it is a high premium offering to have. And it is an offering, of course, that fits completely alongside our products. So in that sense, it would be for us a very Convenient and a very value creating addition to the portfolio, but I don't think it would necessarily change the rankings In China, it would probably be a nice addition to the already very high value of our China business in there, but it wouldn't change the ranking there. Does that answer your question?
Yes. And just another one on the kind of the timing. Did were you looking To Corolla, the potential acquisition pre the PPG bid or the PPG bid that kind of started Started with the process internally to kind of carry out your own numbers and make the bid. I guess, I'm just wondering, were you aware of that they were up for sale
Well, of course, as you might imagine, we've had over the past, I mean, we had very regular contacts With the Ticarilla organization there, there was always a stark interest. The feeling was until pretty recently that they were not contemplating a strategic change for the company. We knew despite having had the obvious attraction for what Value creation would be, we knew we had a deal certainty issue if it ever came up, given our positions in some of the markets where Tigreal is active in. So frankly, when we saw the PPG move, who in fact has no overlap and therefore maybe Value creation deficit, we went to work to see how can we we should be the better owner for this asset. We should be able to create significantly more value from the combination.
And that's when we went to work to find a solution for what was our probably our Achilles' ankle in this whole thing, which is the deal certainty. And so we were able to resolve that. But If your question is, were we involved in that whole process as it unfolded, we saw the first offer being made, then we saw a second increased offer. We were not involved in that at all. So we were busy doing our homework to make sure that we could come with a credible offer, and we were not involved in any intermediate steps there.
Thank you very much.
And the next question comes from the line of Laurent Favre from Exane, please go ahead.
Good morning all. Two questions, please. The first one, Thierry, is on Poland. I'm surprised that everybody seems to assume that the deal is a new one now on antitrust. I believe you're bigger than PPG In Poland, so can you maybe comment there on the way you think about interest or the way you think the EU will think about interest?
And the second question is on the M and A pipeline more generally. I guess now we have to wait whether well, what the Board does on the TECORIDA side. Can you maybe talk about how you're looking at the pipeline otherwise beyond Ticarilla in terms of other bolt ons or bigger bolt ons? I think you qualify
On the Poland question, Laura, if I'm well informed the position of PPG and us is about the same, I would say, in Poland. And we would not talk about being able to assure High deal certainty if we hadn't analyzed that very thoroughly and found ways to deal with it. So I think there we feel comfortable around it. Maarten, maybe you want to talk about the M and A pipeline?
Yes. So as you know, we are pretty to look at potential bolt on targets. And then what you said is right. This is kind of the at the upper limit of our bolt on targets in terms of size. We just closed A deal in North America with our yacht business, we are, this Bold on opportunities.
As you know, we have kind of mapped out for ourselves in our different performance cells Where are the possible white spots or where the possible opportunities are? And this is kind of the focus we give on our bolt on pipeline. And in fact, the interesting thing is that this offer for tequila It's also really in the sweet spot of for our GECO EMEA business in one of our strategic mandates. So it very much fits in our bolt on strategy and our So it is very much in the context of what we have been looking at and We have been busy with
And if you allow me, Maarten, to build on that, I think this is our motive for making this proposal It's really in the same spirit as what we did in Romania, what we did in Spain over the last few years. It's really deepening our market positions in those markets and creating efficiencies. So this is not driven by size. It's not driven by anything else. It's really it's a big one as a bigger bolt on, I would say, But it's really driven with the exact reason of how can we deepen the profitability and the return of the countries that we operate in.
So it fits completely in there. Does that answer your question, Laurent?
Yes. And if I sneak in the last one, I understand you don't want to talk about Profitability at the country level, but if could you once we've done the triangulation on sales of the hand pull package, can you maybe give us a hint on Profitability of those assets to be disposed of compared, for instance, to your Deco margin globally or to Ticarilla's reported margins?
I would say, Laurent, I think, David, you're right. We don't give that information, but those countries are in the similar profitability as the rest of the Deco EMEA business.
Thank you.
And the next question comes from the line of Alex Stewart from Barclays. Please go ahead.
Hello, good morning. A couple of questions. Thanks for taking them. But can you talk about needing to put some investment into the assets once you acquired them? Can you possibly try and quantify what sort of CapEx would be required there.
Secondly, if the deal completes and you require and consolidate to Quirilla, What are the 2 or 3 metrics, financial metrics Thierry and Martin that you would look at that you think best Track the success of the deal over the next 3 to 5 years. And then finally, I know this has been kind of asked already, but Particularly illustrated below €20 for several years now. So What was the reason that you didn't make an approach in the past and instead waiting until they did taken
I'd be big to push
the price up to announce your intention. Any color or additional color, if you feel like you've answered that, that's fine too. Thank you.
Yes. Thanks, Alex. Maybe I can take the first question, the last question, then Maarten, you can talk about the metrics. On the investments, for us, in fact, in those Geographies, we're doing actually quite well. So to be honest, a lot of the investments that we here indicated are investments we could probably do in our own infrastructure.
Sorry. So I think this fits. The investments would probably be and I've alluded to that, If I take places like Russia, for example, Ticarilla has assets. We have assets, and this is both on manufacturing, but also on logistics, etcetera. So now all of us make it in a spot and then Russia is a gigantic country.
So in fact, if we can just Just to make sure that we use the assets in more rational ways, if we use the warehouses in a more rational way or rationalize The warehouse network, this obvious and that often comes with investments. Also, if you do some changes in raw materials, you often have to do some investments. So I think it sits In the category of making sure that the hardware and the assets really fit, and actually that we have much more flexibility between the 2. The same is for our if we have a much more dense market position, Then, of course, it allows some really logistical and production optimizations also with some of our Performance Coatings products that we distribute in those regions pretty heavily. I think I've alluded to that in previous calls that the Nordics is very interesting region, But frankly, it's a big geography.
So if you don't get to a certain critical mass of market position, you kind of get you lose a lot In just getting stuff from A to B. And then if you count in Russia, that's definitely the case. So it is in total amount, Alex, it's Not overwhelming, but I think it would definitely have a much bigger return on what our investments are to actually make the best out of the 2 networks. Let me then address your last question before Maarten talks about the metrics. This is why didn't we approach.
Now in the industry, we've had Conversations, of course, in the past, yes, they were quoted lower before. But until very recently or until we actually saw The announcements, we and we're probably not the only ones, felt there was a clear signal that they were not contemplating a strategic change. And to be honest, who keeps proposing to somebody who doesn't want to get married? So obviously, when the announcement came out, the first announcement, It was for us since we knew the situation quite well, the markets and the lay of the land, that was for us to basically in high Speed to start working at resolving our potential deal, certain issues we might have had. So there's not much more to the story than that to be honest.
Yes. Maybe on the metrics, I think it's a pretty simple answer. We have worked We spent quite a bit of time to underpin this business case for us. But ultimately, we look at the same metrics we look at internally for our business, Which is basically the top line development. It's the return on sales and, of course, the cash generation linked to working capital and last but not least, return on investment.
So it is very much the same metrics we look at internally, which will apply also for the metrics we look at this case From an operational management perspective.
Alex, did that answer your question? Yes. Thank you.
Okay. Thank you.
And the next question comes from the line of Jaydeep Pandya from On Field Research. Please go ahead.
Thanks. Hi, Ruvo. First question is around Just the logic behind this deal. So essentially, if I'm not wrong, what you're doing is buying Ticorilla's Deco and selling your own deco in the Baltic and the Nordic region. And so basically just want to understand How deep is the M and A pipeline that you have to go for an asset, which who has already a bid?
Because Essentially, if I back out your Odeco business from the deal, then we are looking at a deal for which you have to do a lot of work Not to move the needle too much. That's the first question. And the second question really is Very simply, given that you're going to if everything goes well, spend a decent chunk of money buying TEGORILLA, when will you start buying
All right. A couple, Jadeep, thank you for your question. Now the logic, I just want to just this to be a misconception. The overlap is only a part of what we get in. So there is a significant It's not just we sell 1 and we buy 1.
We sell part that is overlapping with a part of the activities Of the Crillis, I just want to be clear there that it's still a significant step up that would or delta that actually comes to our bottom line. So you say, well, if the view were to climb, well, frankly, we wouldn't. And I think you've got to notice, Jaideep, that we There's a number of deals that we let go by. I just want to remind people the Dulux 1, for example, New Zealand service at no thanks. It was actually Several the same multiples as we talk about here, but we felt there is no credible story to create synergies in this whole thing or to create value.
And just for the emotional reason of just having Dulux, the whole band together, that was not strong enough for us. So I just want to remind you all these are the same people who do the offer here. So The reason is that we feel that, sure, any M and A is work to get done, but that it actually is addressing and it is actually a Quite nice value accretive opportunity that we have. So on the M and A pipeline, I think we feel pretty comfortable on what we have there. This is just one.
I mean, it's not often that assets like this come on the market where we have for a long time felt this is kind of an obvious one to create a value, and we should be The better owner of this. On the share buybacks, I think I'll let Maarten talk about share buybacks versus Something else, but I just want to remind people before we do that, that we are continuing with the share buyback that we have. So I think It shows you probably also the cash generation that we have currently in the company. So we feel pretty comfortable around that. But then I think, Martin, you can probably explain how it feels and fits in our priorities.
Yes. So overall, I think this fits very much in our capital allocation priorities. We are continuing with the current share buyback of €300,000,000 And in the meantime, we're announcing This potential deal, so it is basically firing on all cylinders in terms of Capital allocation priorities, and that's what we said we would do, and that's basically what we are doing at the moment.
So, Jari, for us, was pretty clear on any of the deals we did. Are we better off spending the money buying our own shares? Or are we better off doing the M and A? And that's where we landed on this one.
Just a follow-up. God forbid, if the deal doesn't go through for Akzo and that lovely company from the other side of the Atlantic Goes crazy on the offer. What is your plan B given that they will clearly then become number 1 in the Baltics and the Nordics? So is there a plan B where you already have a strategy that if there's a change in the owner with Obviously, change in culture and heritage angle, you will ratchet up your marketing to gain market share in the Baltics. So I'm just trying to understand if there is if the other guys win it, it's still actually not so negative, Akzo.
Yes. Well, first of all, Janneep, I'm not sure if I would use the words God forbid. I think we're going to be very disciplined in what we offer. If it goes to a level where we feel we can't create value on that, then frankly, may the force be with whoever buys the company. So I think in that sense, we'll be very disciplined.
For what we are concerned, I think I've alluded to that. I think we're doing the other momentum in those regions, The sub region here from EMEA, we're actually doing quite well. I mean, the business is now very healthy. I think we're having Good growth in those markets. So the plan B would be all right.
We just continue to build on that. We would probably More invest in that region as we were planning to do. So I think we're pretty comfortable around the growth momentum. It's going to be less of a quicker step up because you have to do it then organically, and then we'll move on to other M and A targets. So in this sense, it's It's a very rational decision, but this would just be an opportunity we think would accelerate things.
Does that answer your questions, Adi?
Great. Good luck. Yes, absolutely. Good luck. Yes.
And the next question comes from the line of Geoff Haire from UBS. Please go ahead.
Good morning and thank you very much for the opportunity to ask some questions. Most of mine have been asked, but it's just the 3 remaining ones. First of all, have you talked to any of the major shareholders of the Carolla about this offer you've made? And then secondly, I haven't had a chance to read through the offer document of PPG for Ticorilla. Is there a break fee that you will have to fund effectively if Your deal goes ahead given that particular Board have already recommended this to their shareholder.
Yes. Jeff, on your first question, we had some joint shareholders between us and Ticarilla. Those topics, of course, have come up in the past, but I'm going I'm stressing the word in the past. In this specific episode now, we have not Talk to the shareholders. So the answer is no.
Secondly, before we go into break fees and what would happen, etcetera, I think the PPG offer has some details in it. We have spoken to the Ticarilla Board. They're assessing it. So I would Probably not want to comment on what other elements that they might bring up in an answer. So I think stay tuned, I would say.
Okay. Thank you.
And the next question comes from the line of Chetan Udeshi from JPMorgan. Please go ahead.
Hi, thanks. Can I just clarify 2 things? First one, in terms of divestments to Hempel, is it going to be essentially from SBU West of Tukwila? I mean that those countries in SBU West and I know you don't want to give a specific number, but should we assume at least less than half of The revenue of Tecolita in that region will be essentially divested. And in terms of what you get from divesting From these assets as part of the package, can we assume the multiple that you get would be similar to what is the multiple You might be paying for the rest of the business or the whole business of particular areas?
Thank you.
Yes. Okay. A couple of questions here, Chad, and I'll have to disappoint your front, but some of them we will not answer on that. But on the multiples I would say we refer to win win and that's how I think both Hempel and us think about it. So I think that that's a surprise.
It probably gives you an idea On or at least some feeling on where we came out on both sides. So I think we feel pretty comfortable that we haven't We have a good deal on both sides on that. On the size, I'd rather not go in there because that's slightly dependent on the different scenarios that come out. But yes, if this were to go on, there would be in that as the U. S, there would be significant step up in top line.
So I'm not going to go more quantitative in that. And then last but not least, if you talk about the steps we would have to take to make it happen, Most of the deal certainty questions revolve around not all, but some countries or subregions in SBU West. So yes, The steps we were preparing for relates to the SBU West. Does that answer your question, Chaitan? I know it's a disappointing answer, but so be it.
Yes. Thank you.
And the next question comes from the line of Matthew Yates from Bank of America. Please go ahead.
Hi, good morning, everyone. I think we've covered most of it. I did just want to come back to governments and the chain of events here. You're arguing it's a very logical deal and you are the right owner. Could you not have been more aggressive in the In presenting such a combination to the Ticarula Board, I mean clearly you've now found yourself in the midst of the bidding war offering over 100% premium.
And there's the risk here that you have to continue to go higher.
And so is there anything you
can say about access to intimation
Yes. Matthew, good questions. Again, I've addressed it before. I think in the previous context Until relatively recent, I think we were led to believe that the company, Ticarilla, was not considering A strategic move. Since we have high respect for the assets of tequirilla and before because we thought this is really a very good combination, We weren't necessarily going to push it.
So we were somewhat surprised about what came out in view of that there was obviously a change of heart In the Board of Ticarilla, I object against the word bidding war, however. I think for us, what came out when we saw the first announcement of the offer in December. For us, it was just a signal so Ticarilla is in play, and then we just basically could crank up all the work we had done, Including then accelerating how to get to deal certainty as part of the package. So I can only refer to on the bidding. We've done our homework.
We know what the value of the asset is for us in a very realistic And achievable value creation, and that's the only thing. So there is no bidding arm wrestling going on I mean, this is what the asset is worth for us, and we believe the combination would be very powerful.
I don't know if
you want to address on the other question on where we want that Matt you had.
Yes. So on the process going Of course, we will ask access to information equal to The access PPG has had in terms of due diligence and therefore make sure that we Validate and confirm all the assumptions we have taken so far, and that will lead maybe to Further review or sharpen our pencils, but that will be the steps going forward.
Just want to point out though, Matthew, that in many of the markets, we are alongside in the market, so we know their market positions, their distribution channels, their logistics head up, we know it Quite well. So I think the diligence would be limited to more central information. We have the advantage. That's also why we can create these efficiencies we know in quite a level of detail how their positions are and how they operate in countries.
Yes, just one quick follow-up though in terms of the change in Tone or strategy, if you will, from Ticarula. Do you think that is purely a financial consideration that Somebody has been willing to put up a very high premium that creates more value for its shareholders than it could organically? Or is there anything in the broader industry and its structure that's suggesting that there is a sort of consolidation trend
It's pretty obvious and I think in 2020 for a large part of the year it was a bit calm given the COVID restrictions etcetera. So people probably tended to go to the assets they knew best for some of the deals that happened. So I think the consolidation is very clear On what the inner motives are of the Tekorilla Board, I frankly think you should ask it to the Tekorilla Board. Not sure if that is for us to comment.
Thanks for taking the questions.
And the last question comes from the line of Martin Evans from HSBC. Please go ahead.
Yes, thanks very much. Again, just going back To Ticorilla's market position, obviously, you see a lot of operational efficiencies and potential on cost savings. What would you be getting sort of in addition to that in terms of their exact market position? Because if we look back to the days of ownership by Chimera and then when the business was subsequently spun off, the messaging was very much that the business was number 1 in the Nordics. And also at the time, I seem to recall number 1 in Russia, too.
Has the business maintained that, those very strong market positions, which Obviously, massively important on the Deco business where brand leadership and local loyalty is usually important. So would you be essentially buying a number one position immediately in the Nordics and also in Russia to which you could add
Yes. Well, just to answer the question, it's pretty clear. Yes, I mean, Ticarilla has The markets they operate in, in the Nordic, Baltics and then Russia, etcetera, they have a leading position that hasn't changed at all. I think in the last 3 to 4 years, and we've commented that in previous sessions, I think. We've been pretty busy on getting our Nordics business really Operationally healthy and also financially healthy, that has been quite successful.
We've actually crept up across that whole subregion, Including Russia, I think we've been creeping up in market share. But yes, with this deal, there are very strong market positions That comment, that makes it so attractive. And in certain areas, I mean, the reality will be that it's a bolt on but reverse, I would say, where we can Have our business being becoming part of what Ticarilla has built and therefore create the efficiencies and the stronger market impact that way. So, but they kept definitely in their position today.
Great. So, thank you very much. That's about all the time we have For today, so for additional information, please contact Angstnerbel Investor Relations. And we look forward to speaking to you again soon. Thank you.
Thank you.
This concludes our conference call. Thank you all for attending. You may now disconnect your lines.