00:00Walk us through the merits of this deal and why now when you've considered it before?
00:08Well, it's a really exciting combination. It's something that we've looked at for many years.
00:15Axel & Nobel and Exalta make a lot of sense together and a lot of business sense.
00:20As you said, it's going to be $17 billion of sales, $25 billion of enterprise value.
00:25It's very synergetic, $600 million of just cost synergies annually.
00:30And I think this is also a good remedy for the macro blues in a time of uncertainty.
00:36Having mechanical value creation like this makes sense.
00:39And it's a no premium merger of equals where Axel & Nobel is paying 2.5 billion euros to its shareholders up front.
00:46And then we make that a 55-45 deal, 55 for Axel, 45 for Exalta.
00:51I'll be the CEO of the combined entity, Rakesh, Exalta's chairman, is going to be chairman.
00:57And then we'll be off to the races.
01:00Can you talk us through your decision to move your listing now to being primarily in the New York Stock Exchange?
01:06You were dual listed, but after this acquisition, you plan on being primarily listed in New York.
01:11What drove that decision?
01:12Well, if you look at the investor base of Axel & Nobel today, 62% of our shares are actually in U.S. hands.
01:22The coding space is heavily dominated by U.S. investors.
01:26So as we combine the two companies, it really makes sense to be listed in the U.S.
01:30And might as well keep it simple and have a sole listing in the U.S.
01:34Greg, speaking of that listing in the U.S., you also made a key point in your previous comments there talking about a no premium merger of equals.
01:44Can you just walk us through decision making on what got that across the line?
01:47Were there some compromises you had to make in those negotiations?
01:50Well, there's always compromises, particularly on things like the governance.
01:57You know, who's going to be running the company?
01:59How's the board going to look like?
02:02What's going to be the parity?
02:04What helped the transaction happen is that both companies were actually doing well.
02:09So as both companies were performing, we're subject to the same macro pressures.
02:14So that's also an equalizer.
02:15And at the end of the day, there was a window from a valuation perspective to make it work.
02:22We were willing to find a workable arrangement on the governance.
02:30I'll give you an example.
02:31I'll be the CEO.
02:32Rakesh is going to be the chairman.
02:34It's going to be a Dutch domicile company, but it's going to be sole U.S. listed.
02:39And also, we're doing away with all the traditional bells and whistles that you have in Dutch governance.
02:44So it's going to be a one-tier board, not a two-tier board.
02:47We're taking away the schtifting, which was the foundation that was kind of a defense mechanism on top of the company.
02:52So we're making it as much as a U.S. company as you can be as an envy.
02:56And we think this is going to be exciting for investors who are mostly American investors anyway.
03:01Does this decision to, I guess, as you were just mentioning there, become mostly a U.S. company in the way you operate?
03:09Does that have anything to do with U.S. tariffs and perhaps having a better supply chain in order to skirt around some of the highest tariffs out there?
03:18That I know that you and your competitors and many out there who are in goods, trades, imports and exports have been dealing with a lot of tumultuous decisions around.
03:27No, it doesn't, because AXA Nobel has 130 factories around the world.
03:35We've got about 30 of them in the U.S.
03:38We're very much a U.S. company in the way we operate in the U.S.
03:41And the tariffs are not an issue because we've got local production very much as the U.S. government desires today.
03:49So we go from 130 factories around the world to 170 factories around the world, if anything, that makes us even more local.
03:56But that wasn't an issue in the first place.
03:58It really is about reinforcing ourselves in the U.S. market because it is the strongest coatings market in the world.
04:07But it's also having a face that our investors are comfortable with.
04:11And once again, our investors at AXA Nobel are mostly U.S. investors and our peers are mostly U.S. companies.
04:17So we're joining the party and we're excited to be U.S. listed as we will be when we close the transaction.
04:24Greg, it's fascinating that you want to join the party in the U.S. at the moment because we are literally on a day where we are seeing a massive sell-off.
04:33We're worried about perhaps some of the market reaction that we are seeing.
04:37That being said, take the markets out of this.
04:39The economy is also slowing down broadly.
04:41So some would argue that the party that's been happening in the United States will not be lasting very long.
04:46Just from your perspective, what kind of demand trends are you seeing?
04:49Are you seeing a slowdown from some of your customers?
04:52Well, I said joining the party in the U.S., you know, maybe it's, you know, buy low, sell high.
05:00But at the end of the day, we were very confident about the strength of the U.S. markets.
05:06We've seen some of our markets go sideways this year, but we are seeing signs of life towards the end of the year.
05:12And we think this combination with Excel that reinforces us in the U.S. is going to be very beneficial for our company and our shareholders over time.
05:23So it's, you know, you don't do these mergers based on a specific window of the market.
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