Dulux is by far the largest decorative paint supplier in this country. It's two main competitors, Taubmans and Wattyl combined make up about the same size as Dulux. The question is how much potential growth is there for Dulux to make buying their shares worthwhile.
Taubmans (now owned by global second largest PPG) and Wattyl (soon to be owned by heavy weight ValSpar) are both now with some muscle. Taubamns and Wattyl will both have the backing to put a challenge to Dulux if they choose.
Local aquisitions will be difficult for Dulux. The ACCC has already shown its concern at any major diminishing of the paint market by twice disallowing Wattyl and Taubmans from tieing up together. Add this to the fact that Australia has a finite volume market, significant expansion locally is unlikely.
To complicate matters, if Dulux wants to expand overseas the "Dulux" brand everywhere but Oz and NZ is owned by competitor and world paint leader AkzoNobel. They would have to operate in markets directly against their own brand!
AkzoNobel is interested in Dulux Australia however the asking price has been too high, hence no deal (in the scheme of things Australia is not a big market in paint so conglomerates aren't going to pay inflated prices). PPG and Valspar won't be able to go for Dulux whilst they own Taubmans and Wattyl, so growth in shareprice by takeover is also a bit questionable.
Just my thoughts
DLX Price at posting:
$2.61 Sentiment: None Disclosure: Held
