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DuluxGroup share price higher after takeover edges closer

In morning trade the DuluxGroup Limited (ASX: DLX) share price has edged higher following the release of an update on its proposed takeover by Nippon Paint.

At the time of writing the paint company’s shares are up slightly to $9.77.

What was in the update?

After the market close on Monday DuluxGroup confirmed that the Australian Securities and Investments Commission (ASIC) has now registered its scheme booklet.

This scheme booklet includes the independent expert’s report from Grant Samuel & Associates which concludes that the scheme is fair, reasonable, and in the best interests of shareholders, in the absence of a superior proposal.

In light of this, the next step for the company is to hold a scheme meeting on July 31 in Melbourne. At this meeting shareholders will be able to vote for or against the scheme.

The directors of DuluxGroup have once again unanimously recommended that DuluxGroup shareholders vote in favour of the scheme, in the absence of a superior proposal.

As things stand, they intend to vote all DuluxGroup shares in which they have a relevant interest in favour of the scheme.

Independent expert’s report.

Nippon Paint has made an offer of $9.80 per share, which implies a fully diluted market capitalisation of $3.8 billion and an enterprise value of approximately $4.2 billion.

The independent expert has concluded that this is in the best interests of DuluxGroup shareholders in the absence of a superior proposal.

It has assessed the full underlying value of DuluxGroup at between $8.53 and $9.93 per DuluxGroup share, which means Nippon Paint’s offer is at the high of this valuation range.

In light of this and its recent FIRB approval, unlike Vocus Group Ltd (ASX: VOC), it looks like it is now only a matter of time before DuluxGroup’s takeover is complete.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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