Wuthelam, already the largest shareholder in Nippon Paint, will spend 1.29 trillion yen (S$16.69 billion) to raise its stake to 55.1 per cent from 39 per cent now, the Japanese company said in a filing on Friday (Aug 21).
It will be one of Asia’s largest cross-border transactions in 2020.
Wuthelam Holdings is a closely held paint and coatings maker. Its founder Goh Cheng Liang, 93, moved up this year to third place on Forbes’ list of Singapore’s richest as his net worth increased to US$14.8 billion from US$9.5 billion last year.
Nippon Paint has had ties with Wuthelam for more than 50 years. Mr Goh started making paints in a small factory in Singapore before he went on to partner with Nippon Paint in 1962, Forbes reported. His son, Hup Jin, was appointed chairman of Nippon Paint in March 2018 and also runs their privately held joint venture, Nipsea.
In 2013, Wuthelam began efforts to gain majority control of the Japanese paint company. Both of them operate ventures in countries including China, Singapore and Malaysia, and decided to unify their Asian businesses to seek “more ambitious moves” to grow and deliver shareholder returns, they said in the statement.
“Asian companies are getting stronger and narrowing the competition gap with Japanese businesses,” said Mitsushige Akino, senior executive officer at Ichiyoshi Asset Management Co. “There could be more consolidation in the basic materials space. Looking at it in terms of auto production, spreading into Asian countries makes sense.”
Nippon Paint, the fourth-largest pain maker in the world, last year acquired DuluxGroup, Australia’s largest paint manufacturer, for US$2.7 billion and Turkey’s Betek Boya for US$247 million.
Shares of Nippon Paint jumped as much as 5.1 per cent in afternoon trading in Tokyo after the Nikkei newspaper first reported the news. Nippon Paint chief executive officer Masaaki Tanaka is scheduled to hold a news conference at 3:30pm local time.
“The many applications of paint include residential and commercial construction, transport applications such as cars and trains, and infrastructure such as bridges and roads, meaning that demand for paint grows in step with population growth and urbanization,” Nippon Paint said in the statement, adding that these trends are strongest in Asia and are likely to deliver greater sales growth.
With additional information from The Straits Times