Of all the recent takeover battles in Australia, the one between paint maker Dulux and construction products manufacturer Alesco has been one of the most eventful.
Now, however, it appears to be over. On Friday, the Alesco board unanimously recommended its shareholders accept Dulux’s ‘best and final’ offer at $2.05 per share.
From the Alesco board’s point of view, this is a disappointing defeat. As recently as June, the board slammed Dulux’s initial offer of two dollars per share as ‘inadequate’. That offer, Alesco said, was an opportunistic attempt at the low point of the building cycle to snap up the company at a bargain basement price.
In support of its recommendation, the board produced an independent valuation of between $2.23 and $2.52 per share.
By contrast, Alesco’s statement on Friday read like an admission of defeat. The board’s initial view had not necessarily changed, with chairman Mark Luby saying the offer – a mere five cents above the two dollars the board had lambasted as being woefully inadequate, and nowhere near even the lower end of the board’s valuation of the stock – still significantly undervalued the company. Still, with Dulux having already acquired a controlling stake – its holdings are at 55.7 per cent and surpassed 50.1 per cent – and declared its offer final and unconditional, remaining shareholders had the choice of either accepting the offer or remaining a minority shareholder in a company controlled by another company.
Certainly, from Dulux’s point of view, Alesco’s business, which revolves around construction products and equipment, cabinets and window products and garage doors and openers, will fit nicely with its own existing paints and coatings offering, especially given that both companies operate primarily in Australia and New Zealand.
Alesco, therefore, should be a good fit snapped up at an opportunistic time – and all for not much more than the price of Dulux’s initial offer.
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.