Hostile suitor DuluxGroup has forced Alesco into an 11th-hour acceptance of its takeover offer that saved shareholders from missing out on an extra 27 cents per share dividend.
Building products and garage door maker Alesco on Friday finally agreed to Dulux’s long-running $210 million offer, originally launched in May.
If Alesco had not done so before the weekend, Dulux would have declared its offer unconditional on Monday and gained effective control anyway, with it already holding 55.7 per cent of the target’s shares.
Alesco shareholders would have missed out on a fully franked 27 cent a share special dividend, to be paid if Dulux lifts its holding in Alesco to 90 per cent.
Those factors and the likelihood of Alesco shares falling led to the board recommending the $2.05-a-share offer.
Despite recommending the offer, Alesco maintained its long-held view that it undervalued the company.
Alesco chairman Mark Luby blamed what he said were the worst trading conditions in building for a decade and low confidence for forcing the company to accept the deal.
“Clearly we would’ve liked some more market momentum which would have helped certainly improve the outcomes of our business,” he told AAP.
“While it was a finely balanced decision, I think on balance it’s a good deal for our shareholders.
He said he was confident conditions would eventually improve, with interest rates low, incentives to build new homes in NSW, good GDP growth and latent demand.
The takeover process had been bogged down for months amid disagreements between Alesco and Dulux about dividend payments and franking credits.
Dulux’s offer is made up of $1.63 in cash paid by Dulux and dividends of up to 42 cents per share paid by Alesco.
The 42 cents comprises a five cent fully franked dividend and a 10 cent fully franked special dividend – both already paid by Alesco on September 7 – and the extra 27 cent a share fully franked special dividend.
Dulux has agreed to hold off declaring its offer unconditional while there is a chance that the 27 cent dividend can be paid by Alesco.
It had previously said it would declare its offer unconditional on or after October 1, once its holding reached 50.1 per cent.
Dulux chief executive Peter Kirby welcomed Alesco’s decision.
“As a result, Alesco may distribute to its shareholders up to 27 cents per share of fully franked dividends,” he said.
“It’s a win for Alesco’s shareholders and DuluxGroup shareholders.”
Dulux chief executive Patrick Houlihan said he looked forward to working with Alesco’s management and that the resolution provided certainty for its 1,500 employees.
He plans to incorporate three separate Alesco businesses: construction products and equipment; cabinet and window products and garage doors and openers.
Mr Luby said no clear rationalisations existed, which augured well for employees.
Alesco shares closed two weaker at $1.96 after coming out of a trading halt. Dulux climbed nine cents to $3.31.
Alesco’s stock has risen by about 44 per cent since the offer was made, at a time the small industrials sector was weaker.
However it is still 27 per cent weaker over the past 13 months.
