join the dots - a lesson in history, page-6

Having seen the price tank as much as it has in recent times I thought I would do some research to see if Wyl might be a good bet for a takeover. Some of what I came up with...

There are three major "house" paint companies in Australia - Dulux, Wattyl and Taubmans. Dulux equals the size of Wattyl and Taubmans together (approximately)

Dulux is owned by Orica, Wattyl is ASX listed and Taubmans is now owned by a multi national paint company PPG (of car panel beater paint fame).

Interestingly Dulux Australia and New Zealand are the only places in the world where Dulux is not owned by another global paint/chemical company called Akzo Nobel. Akzo Nobel operates in Australia in a number of areas, but probably best known through its "International" brand of industrial and marine paints. There is reasonable belief that a combined "International"/Dulux in Australia would have good synergies.

Taubmans has recently been acquired by PPG (in yr 2007), having been bought from Barloworld. Barloworld bought Taubmans from a mob called Courtaulds who ironically was bought out a little after selling Taubamns by (you guessed it) AkzoNobel.

Wattyl remains an ASX listed company. It has run into several problems. Firstly the authorities have knocked back a Taubmans/Wattyl tie up twice. This tie up has been required for years in order to try and take on Dulux head on. Secondly Wattyl have lost their position in a number of big retailers, none bigger than Bunnings. This takes away huge revenue from them. Thirdly there has been an ovarall downturn with the GFC, and finally further complicating matters for Wattyl, is that PPG has also bought two industrial/marine paint companies in Ameron and Sigma. Unfortunately for Wattyl their industrial/marine offer was a license agreement with Sigma. With PPG setting up their own operations in Australia, Wattyl have now lost their Sigma license. This has set their industrial offer back years.

So when I look at the prospects I see...
Dulux would not want Wattyl nor would they be allowed to buy them - Dulux are probably looking over its shoulder from Akzo Nobel
Taubmans have just got new owners and are already known not to be allowed to combine with Wattyl
Unless you're Dulux a predominantly "house" paint company is hard work in Australia.

What Wattyl need to do is find a license agreement from another major industrial paint company that isn't already operating in Australia. To try to grow on essentially household paint only will be near impossible especially when you have such a might in the form of Dulux as your opposition. Until this happens it could be a bit of a wait for a significant rerating.

I don't believe product standard is what differentiates the three companies as Wattyl, Taubmans and Dulux all have very good premium products