Sherwin Williams acquires Valspar

Sherwin-Williams Co. the world's No. 3 maker of lacquers and paints, announced that it has agreed to acquire No. 4 rival Valspar Corp. in a deal worth about 9.3 billion $, it said in a joint communiqué. With this acquisition, Sherwin-Williams becomes the world's largest manufacturer of lacquers and paints, overtaking PPG and Akzo Nobel.

For the best possible transparency, which is mandatory at this level, thewww.sherwin-williamsvalspar.com, where anyone interested in this transaction can get details.

Sherwin-Williams said in a statement yesterday that it will pay 113 $ per share. The price is 35% higher than the price Valspar shares had at Friday's stock market close of 83.03 $, when the company was worth 6.63 billion $.

John Morikis, CEO of Sherwin-Williams, brings the company its biggest deal less than three months after succeeding Christopher Connor in the post. Sherwin-Williams, which records 84% in US sales, gains a company that generates nearly half of its revenue outside the US. Valspar will help Sherwin-Williams expand into Asia-Pacific and Europe, Morikis said in an interview (source bloomberg.com).

Morikis also said that talks began after his installation as CEO on January 1, when "the stars aligned".
Sherwin Williams stores and brands - Dutch Boy, Easy Living and MAB - helped generate $11.3 billion in sales last year. The acquisition will add $4.39 billion to Valspar's revenue from the sale of brands such as Valspar Ultra and Duramax, of which $12% comes from China and $7% from Australia, according to data processed by Bloomberg.

Sherwin Williams is up 11% this year, closing Friday at $288.69. The shares have tripled in value over the past five years, while Valspar shares have more than doubled.

If antitrust regulators force the divestiture of assets that generate more than 650 million $ in revenue, the transaction price would fall to 105 $ per share. If more than 1.5 billion $ $ divested assets would be required for the transaction to be approved, Sherwin-Williams has the right to terminate the deal.

Sherwin-Williams abandoned its 2014 acquisition of Comex, Mexico's largest lacquers and paints company, after Mexican regulators blocked the deal.
The transaction is valued at 11.3 billion $, including debt assumed by Sherwin Williams of 2 billion $.

Sherwin-Williams said it expects to save 280 million $ annually within two years from combining the businesses, annual savings that could eventually reach 320 million $. The deal should close by the end of the first quarter of next year, the two companies said. The company will employ 58,000 people.

Citigroup acted as financial advisor to Sherwin-Williams, which was also advised by JPMorgan Chase & Co. Jones Day and Weil, Gotshal & Manges LLP.
Goldman Sachs Group Inc. and Bank of America Corp. provided financial advice to Valspar, which was also advised by Wachtell, Lipton, Rosen & Katz.