It’s no wonder the DuluxGroup board is unanimously backing a $3.8 billion takeover offer from Japanese paint giant Nippon Paints.
Nippon has no presence in the Australian market and is willing to pay more than $9 a share – in fact, a premium of 27.8% to Dulux’s last share price on Tuesday of this week of $7.67 – and the offer also includes the final 15 cents a share dividend.
The DuluxGroup board said it was recommending the Nippon bid – which will be via a scheme of arrangement – and values the Australian company at $9.80 a share in cash (including the final divi).
Nippon will be knocked down in the rush – the $9.80 is an all-time high.
“We have unanimously concluded that the transaction with Nippon is in the best interests of shareholders,” DuluxGroup chairman Graeme Liebelt said.
“It provides an opportunity for shareholders to realise a significant premium to market value for their shares and is on terms that reflect the strategic value of DuluxGroup to Nippon.”
Dulux has a workforce of 4,000 employees and manages a portfolio of brands including Cabot’s, Dulux, Selley’s and British Paints.
Osaka-based Nippon Paints has 20,000 employees worldwide and is Japan’s largest paint manufacturer with operations in Asia, Europe, and the US but not down under.
Under the offer, Nippon will allow DuluxGroup would be run as a separate division and will retain the Dulux name.
“The combination of DuluxGroup and Nippon will provide further avenues of growth for DuluxGroup and create exciting opportunities for all of the DuluxGroup management and employees,” Nippon president and chief executive Tetsushi Tado said, in a statement yesterday.
“Nippon intends to maintain the legacy developed by DuluxGroup and facilitate DuluxGroup’s existing vision.”
Dulux shares ended at $9.75, up 27.1%. Investors can’t see a counter-bidder in sight because the price is very, very rich – a knockout in fact.