By Kosaku Narioka
Kansai Paint Co. shares rose sharply Thursday morning after the company said it plans to sell its two units in Africa for $450 million as it focuses more on European and Indian markets.
The company’s shares were recently 9.9% higher at 1,789 yen ($13.75) after rising as much as 11% earlier.
Kansai Paint said Wednesday after market close that it agreed to sell the two units–based in South Africa and Mauritius–to a unit of Dutch paint maker Akzo Nobel NV.
Kansai Paint said its Africa business has struggled to grow earnings due to the region’s economic slowdown since the latter half of the 2010s, though profitability improved in the fiscal year ended March thanks to some restructuring.
Jefferies analyst Yoshihiro Azuma said in a research note that the company has had to use a large chunk of its resources for its Africa business over the past decade, but its strength is in industrial coating technology, not the decorative paint required for the Africa business.
“Kansai Paint’s management would be able to focus on businesses other than Africa, which we believe is a significant positive,” Mr. Azuma said.
Shares of peer Nippon Paint Holdings Co. were recently 0.9% lower and the Nikkei Stock Average was down 0.2%.
Write to Kosaku Narioka at email@example.com