Australian chemical and mining giant Orica Ltd. has announced that it will spin off paint and building products maker DuluxGroup to create a stand-alone, ASX-listed company.
Orica, based in East Melbourne, Australia, expects the spinoff to be completed in July, subject to shareholder and court approvals.
DuluxGroup’s business units are Decorative Coatings, Selleys, Cabot's, Yates, and Powder & Industrial Coatings. Products include paints and stains, texture coatings, powder coatings, paint-preparation products, car-care and garden-care products. Its paint, coatings and finishing brands include Dulux, Berger, British Paints, Levene, Walpamur, Cabot’s, Feast Watson, and Intergrain. Other brands include the Selleys lines of adhesives, solvents and sealants. DuluxGroup products are marketed in Australia, New Zealand, Papua New Guinea, and Fiji.
Orica chairman Peter Duncan described the split as “a natural evolution of Orica’s strategy to create two even better companies, each free to capitalize on its strategic strengths: Orica largely as a global leader in mining consumables and services leveraged to mining production volumes, and DuluxGroup as the Australasian market leader in premium-branded coatings, home-improvement and garden-care products.
“Equity and debt market conditions have substantially improved in recent months, and we believe the time is now right for DuluxGroup to pursue its strategy independent of Orica,” Duncan said. “DuluxGroup has been an outstanding business within the Orica portfolio, and we believe it will be an even better business with the strategic freedom offered by a demerger.”
Duncan said DuluxGroup has built a market-leadership position on core strengths of customer relationships; leading distribution channels; technical leadership through continued investment in research and new-product development; and an experienced management team. “It has consistently demonstrated highly disciplined management of costs, cash and margins,” he said.
“These factors provide an excellent base from which to launch DuluxGroup as a stand-alone company. Supporting the company with a dedicated board and tailored capital structure is the next logical step” to maximize shareholder value,” he said.