A COATINGS firm operating a County Durham plant has walked away from a potential merger.

Axalta Coating Systems, based in Darlington, says a proposed tie-up with AkzoNobel’s paints and coatings business failed to meet its criteria.

AkzoNobel, which is pumping £11m into a Gateshead research base, said it is unfazed by the breakdown, adding it will continue to move forward with separate growth plans after fending off a £22.7bn takeover approach from PPG Industries earlier this year.

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Charles W Shaver, Axalta’s chairman and chief executive, said the business, which runs a powder coating factory off Darlington’s Whessoe Road, will continue assessing other possible expansion routes.

He added: “After pursuing a potential combination of Axalta and AkzoNobel, we concluded we could not negotiate a transaction on terms that meet our criteria.

“Any transaction we ultimately agree to needs to generate superior long-term value for Axalta shareholders.”

A merger would have marked a line in the sand for AkzoNobel as it bids to reassert its market presence following a protracted, and ultimately unsuccessful, courtship by PPG Industries, which runs a plant overseeing aerospace sealants and coatings in Shildon, County Durham.

Officials have since confirmed plans to separate AkzoNobel’s chemicals business, and Thierry Vanlancker, chief executive, said that will not be affected by the collapse in Axalta talks.

He added: “I am confident our strategy offers significant value for shareholders and other stakeholders in the short, medium and long-term.

“We remain focused on our options to develop our business and improve profitability in the future.”

The business is spending £11m at its base in Felling, Gateshead, which officials say will bring together more than 100 scientists to work on products to protect steel and concrete structures from corrosion, abrasion and fire.

Axalta is known for operating factories internationally that provide coatings for vehicles, electric motors, building facades and industrial applications, which are designed to prevent corrosion and increase durability.