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Dulux Declares $210M Takeover Victory

Monday, October 1, 2012

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The dust may at last be settling around a hostile $210 million takeover battle between paint maker DuluxGroup and a construction products company Down Under.

DuluxGroup Ltd., of Melbourne, announced Friday (Sept. 28) that it had finally won over Sydney-based Alesco Corp. after Alesco’s board unanimously recommended the offer to its shareholders at $2.05 per share.

DuluxGroup Ltd.

Paint and protective coatings maker DuluxGroup has declared victory in a hostile takeover of Alesco Corp., a building products company.

Alesco announced the agreement on its website, but it also kept this scrolling advisory Monday (Oct. 1): “DuluxGroup Takeover Offer: REJECT the Offer. Your directors recommend you REJECT the offer and do nothing.”

The Players

Alesco manufactures construction products and equipment, including cabinets, windows, appliances, garage doors and openers for the Australia and New Zealand markets.

DuluxGroup, which also operates primarily in Australia and New Zealand, manufactures a vast portfolio of paints, protective coatings and home-improvement products under such well-known brands as Acra-Tex; Dulux Powder, Dulux Protective, and Dulux Auto Refinish Coatings; Cabot’s; British Paints; Berger Premium; and Selleys.

Months of Rejection

For months, Alesco has rejected DuluxGroup’s takeover offer, describing it as “opportunistic” and one that “woefully” undervalued the company, according to reports.

DuluxGroup Ltd.

Dulux’s well-known brands include Acra-Tex high-performance architectural coatings for commercial and residential applications.

However, once DuluxGroup’s holdings in the company reached 55.7 percent and the company declared its “best and final offer” (only 5 cents more per share than its initial offer), Alesco appeared to have accepted defeat.

The companies have also agreed that Alesco may pay its shareholders an additional special dividend of up to 27 cents a share, subject to a favorable tax ruling from the Australian Taxation Office and DuluxGroup achieving 90 percent acceptances.

DuluxGroup chairman Peter Kirby called the deal “a win for Alesco's shareholders and DuluxGroup shareholders."

‘Undervalued’ or ‘Misconceived’?

In a statement earlier this year, Alesco noted a $2.23 to $2.52 per share price point would have been more in line with an independent valuation of the company.

However, DuluxGroup said that Alesco’s reasons for rejecting its offer were “misconceived and deficient,” according to a statement made to the Australian Stock Exchange.

Alesco said the per-share offer was about 20 percent undervalued.

Moreover, the independent valuation was based on a “theoretical scenario where the business units are individually sold and head office is closed,” DuluxGroup said.

DuluxGroup’s hostile acquisition of a controlling stake in the company and Alesco’s resistance has been a story well documented by Australian media.

“The latest developments mark the end to what has been an entertaining saga, with a clear victory for one side and a whopping defeat for the other,” according to DesignBuildSource.