Nippon Paint Holdings Co agreed to buy Australia’s DuluxGroup Ltd for A$3.8 billion (US$2.73 billion) in cash, giving it access the country’s No. 1 sales channel for paints and coatings, as well as sealants, adhesives, garage doors, cabinets and architectural hardware.
The offer by Japan’s biggest paintmaker to pay A$9.80 for each Dulux share represents a 28 percent premium, the companies said in a statement yesterday.
In terms of large deals, it compares with Sherwin-Williams Co’s offer in 2014 to buy rival Valspar Corp for about US$9.3 billion at a 35 percent premium.
It is the biggest acquisition yet by Nippon Paint, which has said that it is looking to buy global rivals to keep pace with consolidation in a US$140 billion global industry in which the top 10 suppliers account for more than half of sales worldwide.
The Osaka-based company in 2017 made a bid for Axalta Coating Systems Ltd, the world’s largest maker of coatings for automobiles, although the offer failed to produce a deal. Axalta had a market value of about US$8 billion at the time.
“This is a logical acquisition, given the strength of the Dulux brand name in the Australian and New Zealand markets, the attractive stable growth potential of the region and the opportunity that the acquisition affords to bolster Nippon Paint’s regional portfolio,” Citigroup Global Markets Japan Inc analyst Atsushi Ikeda wrote in a note to clients.
Although Dulux is Australia and New Zealand’s top paint and coatings company, it ranks 22nd in the world, data compiled by Bloomberg showed.
Dulux shares yesterday shot up to the offer price in early trading in Sydney, while Nippon paint fell as much as 4 percent in Tokyo.
Dulux would retain its name and a leadership team that would operate as a division within Nippon Paint, as the Japanese company adds Australia and New Zealand to operations in Asia, Europe and the US, the companies said.
Dulux had sales of A$1.84 billion in the year ended Sept. 30. Nippon Paint’s offer values the company at about two times revenue, compared with the 2.43 times median for global paint and coatings maker deals, data compiled by Bloomberg showed.
The deal is on track to be completed in August, the companies said.
Dulux is being advised by Macquarie Capital Australia Ltd, while Nomura Holdings Inc is working with Nippon Paint.
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