Nippon Paint has proposed the acquisition of DuluxGroup, which Morgan Stanley notes comes despite the headwinds and a valuation that is already considered expensive. The broker recommends investors capitalise on the bid-driven share price strength.
The board has unanimously voted to recommend the proposal. The broker suspects the takeover may provide an exit before its forecast downside fully materialises. Underweight maintained. Target rises to $9.80 from $6.50. Cautious sector view maintained.
Target price is $9.80.Current Price is $9.75. Difference: $0.05 – (brackets indicate current price is over target). If DLX meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).