The board of Australia’s DuluxGroup has unanimously backed a A$3.8bn ($2.7bn) takeover bid from Japan’s Nippon Paint, the paint and coatings maker said on Wednesday.

Nippon Paint offered to pay A$9.80 a share for the Sydney-listed company, a 27.8 per cent premium on its closing price on Tuesday, DuluxGroup said in a statement to the Australian Stock Exchange.

Shares in DuluxGroup surged 27.6 per cent, while Nippon Paint stocks fell 3.7 per cent on the news.

“The Board has carefully considered the strategic options available to DuluxGroup to maximise value value, including continuing to pursue domestic and global growth as a standalone company, and we have unanimously concluded that the transaction with Nippon is in the best interest of our shareholders,” DuluxGroup chairman Graeme Liebelt said.

DuluxGroup said the offer would give the company “increased opportunity” to pursue its growth ambitions and said no changes were expected to its leadership or operations. It said the offer gave DuluxGroup an implied enterprise value of $4.2bn.

Nippon Paint said it had “essentially no operations in Australia or New Zealand”.

Shareholders will vote on the deal in July.