Alesco: a poor fit for DuluxGroup

Another day, another single-focus company ‘di-worse-ifies’. DuluxGroup, spun out of Orica in mid-2010, has just announced it will bid $2.00 per share for Alesco. Around 75% of DuluxGroup’s revenue comes from paint and coatings brands like Dulux and British Paints, with the remainder from Selleys and Yates. These are excellent brands with similar characteristics—low value, consumer-focused, renovation-driven. I contend that Alesco, which makes garage doors and construction products, is not a suitable acquisition. Sure, management offers up the usual justifications, including earnings diversification, cross-selling and product extension opportunities, leveraging distribution networks and the rest. And the acquisition will be ‘EPS-accretive’....

Another day, another single-focus company ‘di-worse-ifies’. DuluxGroup, spun out of Orica in mid-2010, has just announced it will bid $2.00 per share for Alesco.

Around 75% of DuluxGroup’s revenue comes from paint and coatings brands like Dulux and British Paints, with the remainder from Selleys and Yates. These are excellent brands with similar characteristics—low value, consumer-focused, renovation-driven.

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