The DuluxGroup Limited (ASX: DLX) share price has rocketed after the home improvement business received a takeover offer.
Founded in 1918 Dulux has steadily grown to become the leading marketer and manufacturer of premium paint products across Australia and New Zealand, their trusted brands include Dulux, Selleys, Yates, B&D, and Cabot’s. Dulux is now a global company employing over 4,000 people in Australia, New Zealand, PNG, South East Asia, China and the UK.
Here’s Why The DuluxGroup Share Price Is Going Nuts
The DuluxGroup share price is up around 27% because the company has received a huge takeover offer.
Nippon Paint Holdings, one of the world’s largest paint businesses, has proposed to acquire DuluxGroup at a price of $9.80 per share, inclusive of a $0.15 per share interim dividend which is intended to be paid by DuluxGroup.
There is actually potential for dividends to be paid of up to $0.41 per share, which would include a special dividend of up to $0.26 per share due to the $0.176 of franking credits per share that could be used.
The sale price implies a valuation of 16.1 times Enterprise Value / EBITDA (click here to learn what EBITDA means) and a 35.4% premium to the volume weighted average price over the past three months and a 27.8% premium to yesterday’s closing price, which is mostly why the share price is so much higher today.
The total deal values DuluxGroup’s equity at $3.8 billion and an implied enterprise value of $4.2 billion.
The thinking behind the deal is that it will bring together two world class companies with complementary geographic market exposures. There are no expected changes to DuluxGroup leadership, business portfolio, manufacturing and operations. Nippon has essentially no operations in Australia and New Zealand.
But, this deal will supposedly increase the opportunity for DuluxGroup to pursue its growth ambitions and allow it to leverage Nippon’s global scale and resources.
Time To Sell DuluxGroup Shares?
The DuluxGroup Board have unanimously recommended the proposal, so it’s highly likely it will go ahead.
It would seem now is a good time to sell shares and move on to something else, such as the reliable and proven ASX shares in the FREE report below.
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