Confirming market rumors, AkzoNobel said it has entered what it called “constructive discussions” with Axalta Coating Systems about a merger, adding that the combination of the two players – based respectively in the Netherlands and the US – would create a “leading global player.” At the same time, it said the separation of the specialty chemicals business “remains on track to be completed in April 2018” and will be “unaffected by these discussions.”

Akzo did not say how a deal would be structured or when it hopes to conclude talks, but noted that the “vast majority” of net proceeds from the deal would be returned to shareholders.

Depending on which assets might have to be divested to win antitrust approval, analysts calculated that a merged Akzo-Axalta would likely be the global market leader, with a 12% share and an enterprise value of around $30 billion. The Dutch company is generally regarded as the global number two paint and coatings manufacturer behind PPG, while Axalta is regarded as seventh ranked.

Although Akzo touted the proposed deal as a “merger of equals,” the investor website Seeking Alpha estimated that at €19.5 billion ($22.7 billion) the Amsterdam-based player’s market value is close to three times that of Philadelphia-based Axalta at $8.1 billion. Even after planned sell-off of the specialties business,  it said, Akzo would still “tower over its prospective partner.”

M&A activity in the relatively fragmented global paints and coatings sector has remained brisk for nearly two decades. Axalta is the product of a long string of transactions, after being bought by DuPont from Hoechst in 2000 and sold on several times. The bulk of Akzo’s coatings business stems from its 2007 acquisition of the British ICI group.  Market reports suggest that Sherwin-Williams’ $9.3 billion acquisition of US rival Valspar this past June set has set the mark for further moves as companies seeking higher margins look for niches or greater economies of scale.

Akzo is still licking its wounds from the takeover fight against US coatings giant PPG earlier this year, in the wake of which both its CEO and CFO stepped down, citing health reasons. The spin-off of the specialty chemicals business was seen as a bone tossed to activist investors pushing the PPG deal.  A fund manager told the news agency Reuters that the company’s reaching out to Axalta is “a classic attack-is-the-best-defense” strategy. “Akzo overpromised after defending their own company and started to fail to deliver in Q3, so (they) need to do something transformational.”

According to Reuters, PPG has indicated it is no longer interested in Akzo. After walking away from the deal on June 1, it is barred from rebidding until the beginning of December.