"Nippon intends to maintain the legacy developed by DuluxGroup and facilitate DuluxGroup's existing vision by leveraging the resources of the broader Nippon platform," said Nippon president and chief executive Tetsushi Tado. "As part of the Nippon Group, it will be business as usual and DuluxGroup will still be DuluxGroup."
DuluxGroup shareholders will vote on the offer in a meeting set to be held in late July, with the deal to be finalised in mid-August. The outcome of this vote will be interesting on how it changes Dulux postion in the industry.
The DuluxGroup board has unanimously recommended a proposal from Japanese-based Nippon Paint to acquire the company, saying going forward as a standalone company was not in the best interest of shareholders.
Nippon's offer values the company at $9.80 per share, at a 28 per cent premium to its close price on Tuesday.
"The Board has carefully considered the strategic options available to DuluxGroup to maximise value, including continuing to pursue domestic and global growth as a standalone company, and we have unanimously concluded that the transaction with Nippon is in the best interests of our shareholders," said DuluxGroup chairman Graeme Liebelt.
"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. Nippon has been extremely complimentary of DuluxGroup's team, capability, high quality businesses and track record of performance, all of which they want to maintain. I have confidence that this new partnership will provide strong benefits for both companies."