Finance Consumer DuluxGroup shares soar on back of $3.8 billion takeover bid

DuluxGroup shares soar on back of $3.8 billion takeover bid

Japanese paint company Nippon appears set to take over DuluxGroup. Photo: AAP
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Shares in DuluxGroup have soared more than 27 per cent to a record high after its board backed a $3.8 billion acquisition proposal by Japanese paint giant Nippon.

The Australian paint and homeware company recommended on Wednesday its shareholders approve the scheme of arrangement with Nippon.

The offer is valued at $9.80 a share in cash, including a 15 cent a share interim dividend intended to be paid by Dulux.

Nippon’s offer is at a 27.8 per cent premium to Dulux’s closing price of $7.67 on Tuesday, and a 35.4 per cent premium to the three-month volume weighted average price of $7.24.

At 10.45am on Wednesday (AEST) shares in DuluxGroup were 27.31 per cent higher, at a record $9.765.

The deal is not expected to change the company’s name in Australia and New Zealand, or its leadership, business portfolio, manufacturing and operations.

Dulux chairman Graeme Liebelt said he was confident the new partnership would benefit both companies.

“The board has carefully considered the strategic options available to DuluxGroup to maximise value, including continuing to pursue domestic and global growth as a standalone company, and we have unanimously concluded that the transaction with Nippon is in the best interests of our shareholders,” Mr Liebelt said.

Dulux’s Australian and New Zealand businesses sell Dulux paints and coatings, Selley’s and Parchem sealants, B&D Group garage doors, and Lincoln Sentry hardware.

The company has a century of history in Australia, with its origins traced back to Sydney in 1918. It expanded operations to New Zealand in 1939.

In November, DuluxGroup announced it had lifted its full-year profit 5.4 per cent to $150.7 million.

Its revenue was up 3.3 per cent to $1.84 billion, though it was slowing as building materials suppliers face strong headwinds.

Nippon, which has operations in Asia, Europe and the US, generated about $7.8 billion in sales for the financial year ended December 31.

It has essentially no operations in Australia or New Zealand.

“Nippon intends to maintain the legacy developed by DuluxGroup and facilitate DuluxGroup’s existing vision by leveraging the resources of the broader Nippon platform,” Nippon president and chief executive Tetsushi Tado said on Wednesday.

DuluxGroup shareholders are expected to vote on the potential takeover in late July.

The takeover is subject to approval by shareholders, the courts, the Foreign Investment Review Board and New Zealand’s Overseas Investment Office.

-with AAP