Paint maker Wattyl has accepted a $142 million cash takeover bid from US paint giant The Valspar Corporation.
Valspar, which is listed on the New York Stock Exchange and is one of the world’s largest paint and coating companies, has agreed to pay $1.67 for each Wattyl share.
Shares in Wattyl surged 36 cents, or 28.6 per cent, to close at $1.62.
Wattyl says the proposed acquisition will be implemented via a scheme of arrangement subject to conditions.
This includes approval from Wattyl shareholders and regulatory approval from Australia’s Foreign Investment Review Board and New Zealand’s Overseas Investment Office.
Wattyl’s board unanimously recommended shareholders vote in favour of the scheme and ancillary resolutions at the scheme meetings, in the absence of a superior proposal.
The company said all Wattyl directors intended to vote in favour of the scheme.
The offer is more than double Wattyl’s closing price of 78.5 cents on May 24, the day before it received an indicative and non-binding proposal from Valspar at $1.30 per share.
‘‘The proposed acquisition enables shareholders to realise cash for their Wattyl shares at a significant premium to recent trading levels,’’ Wattyl chairman John Ingram said in a statement today.
‘‘With global expertise and scale, Valspar will provide Wattyl’s customers and employees with significant benefits.’’
Valspar chairman and chief executive William Mansfield described Wattyl as a market leader with excellent brands, high-quality products and broad distribution across all channels throughout Australia and New Zealand.
‘‘This latest acquisition builds on our increasing presence in the Asia Pacific region and presents an outstanding opportunity for growth,’’ Mr Mansfield said.
Valspar already has an industrial coatings business in Australia. It’s believed Valspar wants a retail presence here.
Wattyl distributes its paint to retail customers via home improvement centres and hardware outlets, and to trade customers through 140 company-owned stores.
The acquisition of Wattyl ties in with the arrival in Australia of one of Valspar’s traditional customers, US hardware giant Lowe’s Companies, which has teamed up with retailer Woolworths to take on Bunnings in the $24 billion hardware and home handyperson market.
Wattyl said in a trading update on May 31 that it expected operating earnings before interest and tax (EBIT) for the financial year ending June 30, 2010 in the range of $14 million to $15 million.
The company said at the time that the architectural and decorative paint market remained subdued, but Wattyl had grown revenue and margins and was benefiting from a cost management program.
Wattyl reported a net loss of $1.47 million in the 2008/09 financial year on EBIT from continuing operations before non-recurring items of $6.6 million.
AAP