Nippon Paint in $12-b deal to buy Wuthelam assets

Reuters Tokyo | Updated on August 21, 2020

The Japanese major may look for more merger and acquisition deals to raise capital   -  REUTERS

Wuthelam stake’s in Nippon Paint touches 60%

Nippon Paint Holdings Co Ltd on Friday said it inked a deal worth 1.285 trillion yen ($12.18 billion) with Singapore’s Wuthelam Group, whose stake in the Japanese company will rise to just under 60 per cent from 39 per cent.

Following the announcement of one of the biggest transactions in Asia this year, shares of Nippon Paint closed up 6.5 per cent in a near-flat broader market.

As part of the deal, Nippon Paint will sell 1.185 trillion yen ($11.2 billion) worth of shares to Wuthelam.

Japan’s top paint maker said it will use the funds raised as well as 100 billion yen in cash to buy out Wuthelam from their Asian joint ventures in countries including China, Malaysia and Thailand, as well as acquire Wuthelam’s wholly owned business in Indonesia.

Expansion plans

The 139-year-old Japanese firm is seeking growth outside its mature domestic market, and has prioritised global expansion. Last year, it acquired Australia’s top paint maker DuluxGroup Ltd in a near $3-billion deal.

Asia is Nippon Paint's most important market and accounts for 52 per cent of its revenue, compared with 26 per cent for Japan, according to the company’s website.

The company may pursue more M&A deals should it need additional capital, Nippon Paint said during a conference call.

“Asia is becoming a key region for the company’s sustainable growth in terms of both market size and growth rate due to its projected demographic and economic growth leading to increasing demand,” Nippon Paint said in a statement.

Yuichiro Wakatsuki, Chief Financial Officer of Nippon Paint Holdings, said the deal with Wuthelam would “strengthen its balance sheet”, and was expected to result in a 0.6 per cent increase in profit margins and earnings per share growth of over 10 per cent.

The Japanese firm will remain listed, and its top shareholder Wuthelam will not sell the company, said Masaaki Tanaka, chief executive officer of Nippon Paint Holdings.

The firm noted growing demand for paint in applications including residential and commercial construction, and infrastructure such as bridges and roads.

It said it expects the deal to be finalised in January, and that it will need to be cleared by regulators in each of the markets where the businesses operate.

Nippon Paint was advised by Nomura and Wuthelam worked with Bank of America.

Published on August 21, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like