Dulux Demerger

DuluxGroup listed on the Australian Stock Exchange on July 12, completing its long awaited demerger from Orica. Shares traded on a deferred settlement basis, with normal trading commencing on July 22. The shares finished the day trading at $2.54, valuing the company at $915 million after 99% of shareholder votes were cast in favour of the split. DuluxGroup CEO and Managing Director, Patrick Houlihan, said the company’s strategy was “not to be a mainstream player, but to establish strong sustainable niche positions in premium segments”. Asia is seen as being an area where DuluxGroup can grow, particularly China, where the company is building upon a woodcare acquisition made in Shanghai in 2008.

DuluxGroup is seeking new labels to take into the region and to expand its existing brands, which include Dulux, Selleys, Yates and Cabot’s. DuluxGroup currently generates sales of around $1 billion a year, mostly domestically and in the regional markets of New Zealand and Papua New Guinea. Dulux’s paint division has a 40% slice of the domestic paint market.

DuluxGroup’s retail-trade split at the time of the stock exchange listing was 55-45. Trade and retail paints each accounted for 30% of total sales. The remaining 40% is made up of Preparation & Homecare (15%), Other Coatings (15%) and Garden Care (10%).

Dulux’s ASX listing came less than two weeks after rival paint company, Wattyl, recommended that shareholders accept the $1.67 per share offer from US giant Valspar. Valspar initially launched a takeover offer of $1.30 per share in May, a significant discount against the final offer. The revised offer, which valued Wattyl at $142 million, suggested lofty ambitions on behalf of the American suitor and go some way towards confirming rumours that Wattyl/Valspar might have agreed on some sort of exclusivity tie-up with retail hardware incumbent Woolworths-Lowe’s. Valspar is the world’s sixth largest paint and coating manufacturer.

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