Australian paint maker DuluxGroup is on track to be taken over for $3.8 billion by Japan-based Nippon Paint Holdings.
Nippon Paint, the biggest paint company across Asia, which employs 20,000 people around the world, made a surprise takeover bid at $9.80 per share on 17 April. The shares immediately jumped 27 per cent to $9.75. This takes the company's market value to about $3.8 billion.
The DuluxGroup board has unanimously recommended to shareholders that they accept the offer.
The takeover is subject to approval by shareholders, the courts, Foreign Investment Review Board and New Zealand Overseas Investment Office.
Shareholders of DuluxGroup are expected to vote on the potential takeover at a meeting to be held in late-July.
Dulux won't change its name
"The proposed acquisition is an important step in Nippon's global growth ambitions," DuluxGroup said in a statement to the ASX.
"DuluxGroup will be run as a separate division and will retain the DuluxGroup name.
Nippon Paint operates in Asia, Europe and the United States, but essentially has no presence in Australia or New Zealand. Dulux managing director Patrick Houlihan said there was little overlap between the two businesses, with Nippon Paint only selling a specialised paint to the car repairs industry in Australia.
Dulux can trace its origins back to Australia's first paint manufacturer HL Vosz Ltd, which opened a factory in Port Adelaide in 1904, and became part of broader industry consolidation just after World War I.
It passed through a series of hands including being housed in the global giant ICI and the Australian listed chemical and explosive business Orica, before being spun out as a separate company in 2010.