Good bye Wattyl, hello Valspar.

Shares in Wattyl, the much bid for Australian paint group, jumped more than 25% yesterday after it accepted an offer from US giant, Valspar Corporation.

The company says it has entered into a scheme implementation deed with Valspar for the proposed acquisition of all issued shares in Wattyl, the Sydney-based company said in a statement on Monday.

Valspar agreed to pay $1.67, compared with Wattyl's closing price on Friday of $1.26 and suggestions that a bid might come at a lower price ($1.40 was suggested by some analysts).

Wattyl shares surged 28.2%, or 35c to $1.615 on the ASX yesterday.

Wattyl shares were last at this level in may 2008, as the credit crunch and slowdown were gathering pace.

Valspar has been talking to Wattyl now for two months,

It is listed on the New York Stock Exchange and was one of the world's largest paint and coating companies.

Wattyl said the proposed acquisition would be implemented by a scheme of arrangement subject to conditions including shareholder and regulatory approvals, including Australia's Foreign Investment Review Board and New Zealand Overseas Investment Office.

Wattyl said the company's board unanimously recommended that Wattyl shareholders vote in favour of the scheme and ancillary resolutions at the scheme meetings, in the absence of a superior proposal.

All Wattyl directors intended to vote their shares in favour of the scheme, the company said.

The offer is more than double Wattyl's closing price of 78.5 cents on May 24, the day before Wattyl received and indicative and non-binding proposal from Valspar.

"The proposed acquisition enables shareholders to realise cash for their Wattyl shares at a significant premium to recent trading levels," Wattyl chairman John Ingram said in the statement.

"With global expertise and scale, Valspar will provide Wattyl's customers and employees with significant benefits."

The deal should be cleared by the competition regulator, the ACCC, because it introduces a new, bigger competitor into what is a small, not very competitive market.