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Dulux share price rises after Nippon Paint takeover bid

Japan's Nippon Paint offers A$3.8 billion takeover bid for Australia's DuluxGroup, as target shares soar to new highs.

Australia’s DuluxGroup’s shares soared 28%, to record highs, after Japan’s Nippon Paint offered the Australian paint maker a A$3.8 billion takeover bid.

DuluxGroup share price

DLX-AU shares soared 28% in early day trade on Wednesday, to the offer price of A$9.80, reaching record highs. It follows’s DuluxGroup's shares closing at A$7.67 on Tuesday.

Nippon’s cash offer includes A$0.15 per share of interim dividend that DuluxGroup intends to pay. The DuluxGroup board has unanimously backed the $3.8 billion acquisition, recommending its shareholders approve the arrangement with Nippon.

DuluxGroup to remain relatively unchanged

DuluxGroup would be run as a separate division with no expected changes to its leadership, business portfolio, manufacturing or operations, according to Nippon Paint Chief Executive Tetsushi Tado.

The deal would expand Nippon Paint’s global footprint through entering Australia and setting the tone for the Japanese company to become one of the biggest paint sellers in the region.

‘DuluxGroup will still be DuluxGroup,’ Mr Tado said

Australia's DuluxGroup board backed the $2.73 bln takeover bid from Nippon Paint, which comes as Australia's construction weakens with building approvals at five-year lows.

‘We have unanimously concluded that the transaction with Nippon is in the best interests of our shareholders,’ said Graeme Liebelt, chairman of DuluxGroup,.

Nippon paint shares

Shares in Nippon paint opened 3.4% lower in Tokyo on Wednesday.

Nippon Paint said it expects to fund the proposed deal via a debt acquisition facility and that its offer is not conditional on Nippon Paint securing funds.

Nippon operates in Asia, Europe and the US, but has no operations in Australia or New Zealand.

Nippon generated around $7.8 billion in sales for the financial year ending December 31.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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