Nippon Paint stock price prints record highs on a $16.7 billion merger with Wuthelam

Shares of Nippon Paint Holdings (T: 4612) surged nearly 7% today to print record highs after the Japanese giant accepted a 1.29 trillion yen ($12.18 billion) offer from the Singapore-based Wutelham, who increased its stake from 39% to 60%.

Fundamental analysis: One of the biggest deals in Asia this year

Wuthelam Holdings, controlled by billionaire Goh Cheng Liang, has announced to buy 1.185 trillion yen ($11.2 billion) worth of shares of Japanese giant Nippon Paint. This way, Wuthelam’s stake in the company will rise to around 60% from nearly 39%. 

Nippon Paint will use a chunk of that money to buy their joint ventures in India, China,  Malaysia, Singapore, South Korea and Thailand. The Japanese paint maker will also acquire Wuthelam’s wholly-owned Indonesia business.

This marks one of the biggest deals in Asia in 2020. Goh Cheng Lang, the founder of Wuthelam Holdings, 93, recently became the third-richest person in Singapore as his net worth rose to $14.8 billion from $9.5 billion last year.

The two companies have had ties for over 50 years. Goh Cheng Lang started producing paint in a small factory in Singapore and partnered up with Nippon Paint in 1962. Goh’s son, Hup Jin, became the CEO of Nippon Paint in March 2018 and also runs their privately held joint venture, Nipsea.

Goh Cheng Liang and Nippon Paint decided to merge their companies and seek “more ambitious moves” to increase and deliver shareholder returns, they stated.

Technical analysis: Nippon share price hits record highs

Shares of Nippon Paint logged fresh record highs at 8700 after the deal was announced. It therefore exceeded the previous high set earlier this week at 8570. 

Interestingly, shares of Nippon Paint first gapped around 6% lower at the open before racing higher to close the day 6.52% in the green. The buyers are now likely to target the 161.8% Fibonacci extension line at 8900 as they push the price action higher.

Summary

Nippon Paint Holdings and Wuthelam Holdings cut a 1.29 trillion yen ($12.18 billion) deal to mark one of the biggest deals in Asia this year. Nippon paint stock price rallied over 6.5% to print fresh record highs.