At time of writing, the share price of DuluxGroup Limited [ASX:DLX] is up a significant 26.99%, trading at $9.74 per share.
Prior to today’s announcement, the share price has largely traded sideways over the last year:
The latest news out of DuluxGroup is that the Board has unanimously recommended a Scheme of Arrangement for the acquisition of the company by Nippon Paint Holdings Co Ltd.
Details of the takeover offer
As DuluxGroup outlines in today’s announcement, the Scheme of Arrangement is for $9.80 per share in cash, including a 15 cent per share interim dividend to be paid by DuluxGroup.
Two of the reasons behind the Board unanimously recommending the proposed takeover are that the $9.80 offer is:
- A 27% premium over yesterday’s closing price of $7.67
- Comes at an implied acquisition multiple of 16.1 x FY18 EV/EBIDTA and 25.3 FY18 P/E
DuluxGroup Chairman Graeme Liebelt recommended the acquisition to shareholders saying:
‘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. 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.’
Timetable and next steps for DuluxGroup
Shareholders will have the chance to vote on the Scheme at a Scheme meeting to be held late July.
The Scheme is expected to be implemented in mid-August 2019.
Crucially, the company outlined that there may be an opportunity for eligible shareholders, subject to their marginal tax rate, to receive the added bonus of franking credits that may be attached to the payment of one more special dividend.
The company is looking into the timing of the payment of the special dividend.
For Money Morning