lemony, page-9

re: monday morning ...... Saturday February 11, 2006


Takeover target Wattyl in confidential talks

MELBOURNE: Australia's Wattyl Ltd, target of a hostile A$275mil bid by Allco Equity Partners, said it was in confidential talks on a proposal, raising speculation of a deal with its paint market rival Barloworld.

Shares in Wattyl, the second largest Australian paint company after Orica Ltd, were placed on a trading halt ahead of an expected announcement on Monday.

Diverse South African industrial company Barloworld Ltd said yesterday the evaluation of its alternatives in the coatings industry in Australia were close to an end, and it would make an announcement shortly.

Barloworld gave no further details in the statement. Barloworld has the Taubmans and Bristol brands in Australia and ranks third in the market, but its Australian and Asian paint division posted an operating loss in fiscal 2005.

Analysts said Wattyl could seek to buy the Australian paint business owned by Barloworld, or the South African company could bid for Wattyl as it sought improved profitability at its Australian paint business.

“Financially, they have been struggling to make a reasonable profit, they are too small probably, but I think Wattyl has good brands and good products. It has probably suffered over the years from poor management,” an analyst said.

Wattyl has rejected Allco's A$3.25 per share bid and said last month a report it had commissioned valued its shares at between A$3.59 and A$4.21. – Reuters