Australia's largest paint manufacturer, Dulux, has agreed to a $3.8 billion takeover deal, which it says is offering one of the highest-ever valuations for a company in the paint and coatings sector globally.

The board of Melbourne-based DuluxGroup told investors on Wednesday it unanimously backed the takeover bid by Japanese paint giant Nippon, via a scheme of arrangement for $9.80 a share in cash and inclusive of a 15¢ interim dividend to be paid by Dulux. The offer was at a 27.8 per cent premium to Dulux's closing price of $7.67 on Tuesday.

Dulux has received a $3.8 billion takeover offer from Japanese giant Nippon Paint. Credit:Viki Lascaris

"We have unanimously concluded that the transaction with Nippon is in the best interests of shareholders," DuluxGroup chairman Graeme Liebelt said.

"It provides an opportunity for shareholders to realise a significant premium to market value for their shares and is on terms that reflect the strategic value of DuluxGroup to Nippon."