(Reuters) - Australia's biggest paint maker DuluxGroup on Wednesday backed a A$3.81 billion ($2.73 billion) takeover proposal from Japan-based Nippon Paint Holdings, which is aiming to expand its global footprint.
The proposed offer of A$9.80 per share in cash includes A$0.15 per share of interim dividend that DuluxGroup intends to pay. The offer was pitched at a 27.8 percent premium to DuluxGroup's last close on Tuesday of A$7.67.
Nippon's offer for Dulux comes as the Australian group's revenue growth slows and building materials suppliers face strong headwinds as an east-coast homebuilding boom winds down and home values drop sharply.
"We have unanimously concluded that the transaction with Nippon is in the best interests of our shareholders," said Graeme Liebelt, chairman of Dulux, which was spun off from explosives-maker Orica Ltd in 2010.
Nippon's CEO, Tetsushi Tado, said DuluxGroup would be run as a separate division and he expected no changes to Dulux's leadership, business portfolio, manufacturing and operations.
"DuluxGroup will still be DuluxGroup," he said.
The proposal will be subject to regulatory scrutiny from both Australia's and New Zealand's foreign investment watchdogs.
Nippon, which currently has no operations in Australia and New Zealand, said it expects to fund the proposed deal via a debt acquisition facility but the offer is not conditional on Nippon securing funds.
(Reporting by Devika Syamnath in Bengaluru; editing by Richard Pullin)