Sherwin-Williams to Buy Valspar for $8.9 Billion -- 4th Update
20 März 2016 - 7:31PM
Dow Jones News
By Dana Mattioli, Dana Cimilluca, Liz Hoffman and James R. Hagerty
Sherwin-Williams Co. has agreed to buy Valspar Corp. for about
$8.9 billion, a deal that would give the company more bulk in its
battle with paint rivals PPG Industries Inc. and Amsterdam-based
AkzoNobel NV.
The deal is worth $113 a share in cash, a 35% premium to
Friday's close. The Wall Street Journal reported earlier Sunday
that the companies were in talks to combine.
Sherwin has long relied heavily on its own stores for paint
sales, but last year Sherwin began selling a new HGTV brand of
paint at Lowe's stores, taking some space from rivals like
Valspar.
The purchase would give Sherwin another strong brand to sell
through big-box retailers like Home Depot Inc., Lowe's Cos. and
Wal-Mart Stores Inc., which have been taking market share away from
independent paint stores.
The global coatings market--including paint and coatings used
for cars, ships and myriad other products--produces about $130
billion of sales a year, according to PPG. Sherwin has focused
mainly on the U.S. and Latin America, while PPG has pursued more of
a global strategy with larger operations in Europe and Asia.
Sherwin-Williams valued the Valspar deal at $11.3 billion,
including the assumption of debt. The companies said they expect
minimal pushback from antitrust authorities, but should regulators
require Sherwin-Williams to sell businesses that contributed more
than $650 million to Valspar's 2015 revenue, the deal price would
be reduced by $8 a share. And Sherwin-Williams can walk away with
regulators require divestitures of more than $1.5 billion in
revenue.
Valspar's market value is $6.6 billion. Sherwin-Williams, based
in Cleveland, Ohio, has a much larger market value of $26.8
billion. The combined Sherwin and Valspar would have had about
$15.6 billion of sales last year, slightly ahead of PPG's $15.3
billion. AkzoNobel had 2015 sales equivalent to about $16.7
billion.
Sherwin-Williams said it expects the deal to immediately add to
earnings, excluding one-time costs, and projected $280 million in
synergies a year.
It has been a busy stretch for deals in the chemicals space,
which coatings companies would fall under. Last year, chemicals
giants Dow Chemical Co. and DuPont Co. signed a deal worth a
combined $120 billion.
Write to Dana Mattioli at dana.mattioli@wsj.com, Dana Cimilluca
at dana.cimilluca@wsj.com, Liz Hoffman at liz.hoffman@wsj.com and
James R. Hagerty at bob.hagerty@wsj.com
(END) Dow Jones Newswires
March 20, 2016 14:16 ET (18:16 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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