Dulux share price: 3 things to watch out for ahead of half year results

Dulux share price soared after the Japanese Nippon Paint takeover bid, similarly, analysts expect the Dulux share price to move after it announces its half year results

Dulux half year results Source: Bloomberg

1.Dulux agreement to Nippon Paints' takeover

Analysts say they will observe how the Dulux agreement to the Nippon takeover will affect its half year earnings, announced next week. It comes after Japan’s Nippon Paint proposed buying Australia’s largest paint maker for A $3.8 billion in April this year.

Nippon Paint Chief Executive Tetsushi Tado said the Australian company would be run as a separate division and he expected no change to its leadership, manufacturing or operations if the deal proceeded.

After the deal was recommended by the Dulux board, DuluxGroup share price soared 28% to the offer price. Dulux stock closed at A$9.74, just under the A$9.80 offer price, after the release.

2. Big business buyouts from Japan

The deal is said to catapult Nippon Paint, the world's fifth-largest paint maker, from a small-time player to the biggest paint seller in the region.

Analysts say the cash deal also offers investors in Dulux a chance to cash out at the end of a long construction boom.

According to Refinitiv data, buyouts from Japan in Australia hit $6.5 billion last year, their highest since 2015. The takeover comes as part of a string of Japanese acquisitions in Australia.

3. DuluxGroup share price

After the takeover bid, Dulux said its shareholders will receive $9.80 cash share price, inclusive of a $0.15 per share fully franked interim dividend.

DuluxGroup’s last September earnings showed the company saw an earnings growth of 5.4%

Analysts' outlook for its 2019 half year results are a mixed bag, however the most consistent analysis points to an increase of earnings growth by around 0.1 – 0.2%.

Analysts are baring in mind the Nippon takeover and looking to see how it has impacted earnings results for the Australian company, as well as its share price.


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