Alesco Group chairman Mark Luby has written to shareholders urging them to reject a fresh $210 million takeover offer from DuluxGroup.
Mr Luby’s letter sent to shareholders on Friday said Alesco had had only limited engagement with DuluxGroup since it tabled its sweetened offer earlier in the week.
“Following an initial approach late last week by DuluxGroup, Alesco confirmed that it was open to engaging with the DuluxGroup on a negotiated outcome which is in the best interests of all shareholders,” Mr Luby’s letter said.
“However, DuluxGroup only tabled the revised offer, presented it as DuluxGroup’s best and final proposal and made no genuine attempt to negotiate with the board.
“As a result, your board had no option but to reject the revised offer given its material inadequacy.”
Alesco’s letter to shareholders comes after it lodged a complaint with the Takeovers Panel about some of the details of DuluxGroup’s bid, claiming that they were misleading and deceptive.
Paintmaker DuluxGroup sweetened its offer for the building products maker on Monday, a day before Alesco reported a $13.9 million net loss for its 2011/12 fiscal year.
Alesco says DuluxGroup’s bid of $2.05 a share in cash plus 18 cents in franking credits is too low and “undeliverable”.
The 18 cents in franking credits is on the basis that the Alesco board declares and pays 42 cents per share of fully franked dividends.
Alesco’s snub of DuluxGroup’s latest offer drew a critical response from the paintmaker late on Friday.
“This is a desperate board and management with a poor track record and nothing positive to offer shareholders,” a DuluxGroup spokesperson said in a statement. “It’s time they put the best interests of their shareholders first.
“The fact is that our $2.05 cash offer is there in black and white for Alesco shareholders to see.”
In his letter to shareholders, Mr Luby said given that Alesco had declared dividends totalling 15 cents a share for 2012, DuluxGroup would only be able to pay $1.90 a share.
He also noted that a recent independent expert’s report had assessed the value of Alesco shares to be between $2.23 and $2.52.
“DuluxGroup’s revised offer remains materially below the bottom of this range,” he wrote.
“Your directors believe that DuluxGroup should offer more for your Alesco shares.”
Alesco shares closed steady at $2.02 while DuluxGroup rose seven cents to $3.08.
