Singapore's Wuthelam Group to buy out Nippon Paint for 1.29 trillion yen

[TOKYO] Nippon Paint Holdings on Friday said it will sell 1.185 trillion yen (S$15.37 billion) worth of shares to Singapore's Wuthelam Group, whose stake in the Japanese company will then rise to just under 60 per cent from 39 per cent.

Wuthelam will become a majority shareholder through the deal, which is one of Asia's largest cross-border transactions in 2020.

It is also the latest mega deal in the consolidating paints and coatings industry.

Nippon Paint said it will use the funds raised as well as 100 billion yen in cash to buy out Wuthelam from their Asian joint ventures in countries including China, Malaysia and Thailand, as well as acquire Wuthelam's wholly owned business in Indonesia, in a 1.285 trillion yen deal.

"Asia is becoming a key region for the Company's sustainable growth in terms of both market size and growth rate due to its projected demographic and economic growth leading to increasing demand," Nippon Paint said in a statement.

The firm noted growing demand for paint in applications including residential and commercial construction, and infrastructure such as bridges and roads.

It said it expects the deal to be finalised in January, and that it will need to be cleared by regulators in each of the markets where the businesses operate.

Nippon Paint was advised by Nomura and Wuthelam worked with Bank of America.

Nippon Paint has had ties with Wuthelam for more than 50 years. In 2013, the Singaporean paint conglomerate began efforts to gain majority control of the Japanese paint company.

The two companies operate ventures in countries including China, Singapore and Malaysia.

Shares of Nippon Paint closed up 6.5 per cent after the announcement in a near-flat broader market.

REUTERS, BLOOMBERG