Japan's Nippon Paint has made a $4.2 billion offer to acquire DuluxGroup (ASX: DLX) and the Aussie paint empire has given its unanimous thumbs up, urging shareholders to accept the deal.
Nippon has offered to buy the company for a 100 per cent cash consideration of $9.80 per share which represents a substantial 27.8 per cent premium to DLX's closing price of $7.67 on 16 April.
The offer values Dulux equity at $3.8 billion and an implied enterprise value of $4.2 billion when considering the $9.80 offer price multiplied by number of shares on issue, including the company's net debt of $340.5 million.
The offer is also inclusive of a $0.15 per share interim dividend to be paid by Dulux.
Dulux says the acquisition will join "two world class companies" with market exposures that complement each other.
Managing director and CEO Patrick Houlihan said that there are no expected changes to Dulux's leadership, business portfolio, manufacturing or operations if the buyout is to go ahead.
"We are proud of the successes we have achieved as an independent company since listing on the Australian Securities Exchange in 2010 following our demerger from Orica Limited," says Houlihan.
"Nippon is a global leader in the paints and coatings sector and we are confident that Nippon will continue to support the ongoing success of DuluxGroup's businesses and brands, and that this will create significant opportunities for our staff, customers and strategic partners."
In the previous financial year, Nippon generated around $7.8 billion in sales and has operations in Asia, Europe and the US.
If acquired, Dulux will be the company's first footprint in Australia and New Zealand.
Nippon president Tetsushi Tado says Dulux will retain its name and will be run as a separate division in the corporate structure.
"Patrick and his team have built DuluxGroup into the pre-eminent provider of housing improvement products in Australia and New Zealand with market-leading and iconic brands operating from world-class manufacturing facilities," he says.
"Nippon intends to maintain the legacy developed by DuluxGroup and facilitate DuluxGroup's existing vision by leveraging resources of the broader Nippon platform.
"As a part of the Nippon Group, it will be business as usual and DuluxGroup will still be DuluxGroup."
In the absence of any superior proposal and subject to an independent experts report which concludes that the scheme is in the best interests of shareholders, the board of Dulux unanimously recommends a vote in favour of the buyout.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
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