Paint maker DuluxGroup says Alesco’s rejection of its bid is misconceived and deficient but that the offer remains “compelling”.
DuluxGroup also repeated on Monday that a takeover of Alesco made good sense strategically, but it was not a “must do” deal.
DuluxGroup said it would rather hold 19.96 per cent of Alesco than overpay for a greater stake.
On the table is a $2-a-share offer – valuing Alesco at $188.4 million – but Alesco has rejected it as opportunistic and too low.
Independent expert Lonergan Edwards & Associates has valued the building products supplier Alesco at between $2.23 and $2.52 a share and concluded that DuluxGroup’s offer was neither fair nor reasonable.
“Further to its preliminary observations, released in an ASX announcement on 12 June, DuluxGroup has since undertaken a detailed analysis of Alesco’s target’s statement and considers that the Alesco board’s reasons for rejecting DuluxGroup’s offer are misconceived and deficient,” DuluxGroup said in a statement to the Australian Securities Exchange (ASX).
DuluxGroup managing director Patrick Houlihan said DuluxGroup’s offer price was at a 43 per cent premium to Alesco’s last price before DuluxGroup’s offer was announced.
“The recent deterioration and uncertainty in global share markets makes the offer even more attractive now, and arguably increases the relative value of the offer,” Mr Houlihan said.
DuluxGroup said the independent expert’s valuation and opinion was based on a theoretical break-up of Alesco, which was not available to Alesco shareholders, and was also based on an inflated assumption of future earnings.
DuluxGroup said the Alesco board had not adopted a valuation based on how it intended to operate the business.
“Following a significant decline in profit over the last year, they have not provided any formal forecast or guidance for the next 12 months,” Mr Houlihan said.
DuluxGroup also noted that there were no competing offers for Alesco.
“Alesco’s current share price is being supported by our offer, and Alesco shareholders will no doubt be thinking about where their shares might trade if our offer falls away,” Mr Houlihan said.
Alesco chairman Mark Luby said on Monday that the Alesco board had recommended that shareholders reject DuluxGroup’s offer after thoughtful and diligent consideration.
Also, the independent expert had concluded that DuluxGroup’s offer was not fair and not reasonable.
“The message that Dulux’s offer is materially inadequate could not be clearer,” Mr Luby said.
An Alesco spokesperson said DuluxGroup was ignoring the fact that Alesco had recently upgraded its guidance for financial performance in the 2011/12 fiscal year and announced an intention to pay a fully franked special dividend of 10 cents per share and capacity for additional initiatives over the next few years.
Shares in Alesco were 0.75 cents lower at $1.9825 at 1513 AEST on Monday. DuluxGroup was one cent higher at $2.97.
