Alesco rejects DuluxGroup takeover offer

12 Jun 2012, 5:00 pm   -   Source: AAP

Alesco has rejected a $188 million takeover offer from paint maker DuluxGroup, but DuluxGroup maintains its offer is a compelling one.

Alesco has rejected a $188 million takeover bid from paint maker DuluxGroup as opportunistic and too low, but the predator still says its offer stands as it is.

Alesco, which supplies garage doors, construction products and cabinet and window products, released its target's statement on Tuesday.

DuluxGroup has offered $2 per Alesco share, but Alesco said an independent expert had valued the company at between $2.23 and $2.52 per share.

The independent expert had concluded that DuluxGroup's offer was neither fair nor reasonable.

"DuluxGroup's opportunistic offer undervalues Alesco," Alesco chairman Mark Luby said.

Mr Luby said Alesco had a strong platform for future growth and stood to benefit from a recovery in the detached housing and renovation markets.

Mr Luby said each Alesco director holding Alesco shares would reject DuluxGroup's offer, and they urged all Alesco shareholders to do likewise.

"You own part of a focused building products company with a strong portfolio of market-leading brands and individually valuable businesses which your board believes are difficult to replicate," Mr Luby said in a letter to shareholders contained within the target's statement.

He said Alesco was well progressed through a program to improve its performance, and the company had the capacity to generate greater earnings over the next three to four years.

DuluxGroup's offer price was 16 per cent below the mid-point of the valuation range given by independent expert Lonergan Edwards & Associates, which was $2.38.

"The offer price is significantly lower than our assessed valuation range for Alesco shares on a 100 per cent controlling interest basis," the independent expert said.

"We expect that DuluxGroup will be able to generate significant synergies as a result of acquiring 100 per cent of Alesco."

DuluxGroup on Tuesday noted that no competing offers had been made for Alesco and said the valuation basis of the independent expert was questionable.

DuluxGroup also pointed out that Alesco's own independent expert had said that it was difficult to reliably predict the quantum and the timing of a recovery in the building market.

"Nothing in Alesco's target's statement changes our view that $2.00 cash per share is a compelling offer," DuluxGroup managing director Patrick Houlihan said in a statement.

Alesco shares were one cent higher at $2.03 on Tuesday. DuluxGroup shares were two cents higher at $2.98.

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