All being well, the Orica spin-off, DuluxGroup, should start trading as a separate listed company around June 12.
Orica yesterday released the independent expert’s report into the demerger, which will be done by offering shareholders a one for one holding in the new company.
Also released was the scheme document from Orica for its shareholders to consider.
The Independent expert’s report gave the proposed spin off the thumbs up.
"Grant Samuel has concluded that the benefits of the demerger are collectively compelling and that shareholders are likely to be better off if the demerger proceeds, notwithstanding the disadvantages and risks," it said.
"Accordingly, in Grant Samuel’s view, the demerger is in the best interests of Orica shareholders."
The demerger would make both entities more attractive to investors, Grant Samuel said in its report.
Orica plans to demerge DuluxGroup, which includes the Dulux, Selleys, Berger Paints and Yates brands, creating a new, listed stand-alone company that will dominate its sector.
Orica flagged the DuluxGroup demerger in July 2008 but postponed the spin-off in November 2008 as the global financial crisis caused turmoil on equity markets.
Grant Samuel said the demerger would have some disadvantages, costs and risks, but they were unlikely to be material.
DuluxGroup is expected to have net debt of approximately $245 million immediately following the Demerger.
Grant Samuel said, "In Grant Samuel’s view a more compelling advantage of the Demerger is that it will improve the attractiveness of Orica and the demerged DuluxGroup from the perspective of investors and potential investors.
"Orica appeals to global investors seeking resources sector exposure and capital growth rather than yield.
"By contrast, the natural investors in DuluxGroup are likely to be domestic Australian investors with a focus on yield. In particular, for foreign investors seeking exposure to Orica’s global mining services businesses, the DuluxGroup business is at best an irrelevancy and at worst potentially confusing and an investment disincentive.
"On balance, Grant Samuel believes that there are reasonable prospects that the demerger of DuluxGroup, over time, will improve the performance of the DuluxGroup business."
Orica shares closed up 31c at $27.65.
