Nippon Paint Shares Jump Most in 24 Years on $2.3 Billion Deal

By Shoko Oda

October 28, 2024 at 8:38PM EDT

A worker moves a pallet of paint at the Nippon Paint Ltd. plant in Qingyuan, Guangdong Province, China, on Wednesday, May 10, 2023. Nippon Paint will seek acquisitions overseas and finance the deals by borrowing in Japan where interest rates are low, the co-president of the company said. Bloomberg (Bloomberg)

(Bloomberg) -- Shares of Nippon Paint Holdings Co. surged following its announcement of a deal to acquire a US-based chemicals formulator.

The stock price for the Japanese firm gained as much as 23.6% Tuesday, the most since February 2000. The company said it will acquire Tennessee-based AOC from Lone Star Fund for $2.3 billion on Monday.

“We are positive on this news given the large EPS contribution and high profitability,” wrote SMBC Nikko Securities Inc. analysts Yasuhiro Shintani and Go Miyamoto in a note on Monday. “We think this deal will contribute to regional diversification as well as EPS growth.”

Nippon Paint has been expanding its business through M&A in recent years. The firm acquired Australian company DuluxGroup Ltd. back in 2019, and also bought Europe’s Cromology Holding and its subsidiaries in 2021.