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Barloworld Limited announces A$321 million recommended cash offer for Wattyl Limited

Published on 2006-02-14. Author : SpecialChem

Barloworld Limited ( "Barloworld ") announced that it intends to make a recommended cash offer for all the fully paid ordinary shares in Wattyl Limited ( "Wattyl ") for A$3.80 per share. The offer values Wattyl at A$321 million.

The directors of Wattyl have evaluated Barloworld's proposed offer and have unanimously agreed to recommend that Wattyl shareholders accept the offer in the absence of a superior proposal. All Wattyl directors intend to accept the Barloworld offer for their personal shareholdings in the absence of a superior proposal.

The cash consideration of A$3.80 per share provides substantial value to Wattyl shareholders and represents:

  • a A$0.55 per share (16.9%) premium to the AEP Financial Investments Pty Ltd ( "AEP ") offer of A$3.25 per share;
  • a premium of 51.8% over the one month volume weighted average price of Wattyl shares to the close of trading on 5 December 2005 (being the day prior to AEP's initial approach to Wattyl); and
  • a consideration that falls well within the valuation range of A$3.59 - A$4.21 per share determined by independent expert Ernst & Young Transaction Advisory Services Ltd in response to the AEP offer.

Barloworld has operated in Australia since the acquisition of the Taubmans paint business in 1996. A year later the company expanded its paint interests through the acquisition of listed company Lanes Limited, which, in addition to its motor retail operations, owned the Bristol paint brand. Subsequently White Knight Paints was added to the coatings business.

Tony Phillips, Chief Executive Officer of Barloworld, said the proposed offer represents full and fair value for Wattyl and he believes it will be attractive to all shareholders.

"The acquisition of Wattyl is part of our strategy of building strong and competitive businesses in selected regions of the world. The combination of Wattyl with Barloworld's existing Australian coatings operation will create a vibrant and sustainable business with the ability to provide the consumer with a full and competitive spectrum of coatings products, " Mr Phillips said.

"The merged operation will be able to leverage off its greater scale to invest more heavily in research and development and brand marketing, as well as increasing manufacturing and distribution efficiencies.

"The inclusion of Wattyl's operations within Barloworld will enhance our presence in Australia and New Zealand consistent with our strategy to expand the coatings business in the Asia-Pacific region, " he said.

Barloworld has held preliminary discussions with the Australian Competition and Consumer Commission ( "ACCC "). The company understands that the ACCC will undertake market enquiries over the next number of weeks to address competition issues. Given the structural and other changes in the Australian coatings market over the last decade, Barloworld is confident of a successful conclusion to the transaction and looks forward to assisting the ACCC with its enquiries.

The offer will be made through a wholly-owned subsidiary of Barloworld by way of an off-market takeover bid under the Australian Corporations Act 2001. The proposed offer is subject to the conditions set out in Appendix 1, which include:

  • Barloworld acquiring 90% of Wattyl shares;
  • receipt of all regulatory approvals, including those required under competition and foreign investment regulations;
  • no material adverse change occurring in relation to Wattyl, including no material decrease in forecast FY2006 earnings;
  • no material acquisitions, divestments or commitments being made or announced by Wattyl;
  • no dividends declared or paid in excess of Wattyl's reported after-tax profits before significant items (and, as normal, any dividend declared or paid will be adjusted against the offer price); and
  • the S&P / ASX 200 index not falling below 4,200 points.

Wattyl has entered into a Pre-Bid Deed with Barloworld in relation to Barloworld's proposed offer. This includes a break fee of $3.2 million payable to Barloworld in certain circumstances.

Pro Forma Financial Effects on Barloworld Shareholders

The unaudited pro forma financial effects have been prepared for illustrative purposes only, in order to provide information about how the Wattyl acquisition might have affected the historical financial information presented by Barloworld. Due to their nature, the unaudited pro forma financial effects may not give a true reflection of Barloworld's historical financial position.

ANZ Investment Bank is acting as financial adviser and Corrs Chambers Westgarth as legal adviser to Barloworld in relation to the proposed offer.

Source: Barloworld


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