Following the announcement of one of the biggest transactions in Asia this year, shares of Nippon Paint closed up 6.5% in a near-flat broader market <.N225>.
As part of the deal, Nippon Paint will sell 1.185 trillion yen ($11.2 billion) worth of shares to Wuthelam.
Japan's top paint maker said it will use the funds raised as well as 100 billion yen in cash to buy out Wuthelam from their Asian joint ventures in countries including China, Malaysia and Thailand, as well as acquire Wuthelam's wholly owned business in Indonesia.
The 139-year-old Japanese firm is seeking growth outside its mature domestic market, and has prioritised global expansion. Last year, it acquired Australia's top paint maker DuluxGroup Ltd in a near $3 billion deal.
Asia is Nippon Paint's most important market and accounts for 52% of its revenue, compared with 26% for Japan, according to the company's website.
The company may pursue more M&A deals should it need additional capital, Nippon Paint said during a conference call.
"Asia is becoming a key region for the company's sustainable growth in terms of both market size and growth rate due to its projected demographic and economic growth leading to increasing demand," Nippon Paint said in a statement.
Yuichiro Wakatsuki, chief financial officer of Nippon Paint Holdings, said the deal with Wuthelam would "strengthen its balance sheet", and was expected to result in a 0.6 % increase in profit margins and earnings per share growth of over 10%.
The Japanese firm will remain listed, and its top shareholder Wuthelam will not sell the company, said Masaaki Tanaka, chief executive officer of Nippon Paint Holdings.
The firm noted growing demand for paint in applications including residential and commercial construction, and infrastructure such as bridges and roads.
It said it expects the deal to be finalised in January, and that it will need to be cleared by regulators in each of the markets where the businesses operate.
Nippon Paint was advised by Nomura and Wuthelam worked with Bank of America.
($1 = 105.5000 yen)
(Reporting by Chris Gallagher, Ritsuko Ando, Kane Wu, Scott Murdoch and Ju-min Park; Editing by Clarence Fernandez and Christopher Cushing & Simon Cameron-Moore)