A COATINGS firm behind an £11m North-East expansion is in merger talks.

AkzoNobel is speaking to Axalta over the potential amalgamation of its paints and coatings business.

Confirmation comes as work continues on an £11m development at a base in Felling, Gateshead, which AkzoNobel says will bring together more than 100 scientists to work on products to protect steel and concrete structures from corrosion, abrasion and fire.

Reports suggest the combined business could be valued at around £22.8bn.

A spokesman said: “AkzoNobel is in constructive discussions with Axalta.

“This will create a leading global paints and coatings company through a merger of equals.”

Jefferies analyst Laurence Alexander said it was "a plausible move, with attractive synergies and a good strategic fit, but the timing suggests the AkzoNobel board wants to block off any possibility of losing its independence.

"If the discussions proceed at the same pace as other recent chemical transactions, AkzoNobel could commit to a transaction value before realising the monetisation of its chemicals business," he added.

AkzoNobel is pushing on with operations after fending off a £22.7bn takeover approach from PPG Industries earlier this year.

The firm long argued PPG’s overtures could have caused job losses and has since revealed plans to sell or spin-off its chemicals business by April next year.

Officials say the merger talks will not affect that separation.

PPG runs a plant overseeing aerospace sealants and coatings in Shildon, County Durham.