Sherwin-Williams paint company to buy Valspar for $9.3 billion
The Sherwin-Williams Co (SHW.N) has agreed to acquire rival U.S. paint company Valspar Corp (VAL.N), the companies said on Sunday, in an all-cash deal valued at about $9.3 billion. Sherwin-Williams will pay $113 a share, or a premium of about 41 percent to Valspar's volume weighted average price for the 30 days through March 18, they said in a statement.
Valspar shares closed at $83.83 on Friday on the New York Stock Exchange, and Sherwin-Williams ended at $288.69.Sherwin-Williams said the deal had "an enterprise value of about $11.3 billion." The value includes debt and equity."The combination expands our brand portfolio and customer relationships in North America, significantly strengthens our Global Finishes business, and extends our capabilities into new geographies and applications, including a scale platform to grow in the Asia-Pacific and EMEA (Europe, the Middle East and Africa)," Sherwin-Williams Chief Executive John Morikis said in the release.The combined company would have pro forma 2015 revenues of $15.6 billion, adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $2.8 billion, and about 58,000 employees, they said.
The transaction is worth about $8.9 billion, based on the 79.09 million Valspar shares outstanding according to Reuters data.Sherwin-Williams will remain headquartered in Cleveland. Valspar is based in Minneapolis.Sherwin-Williams manufactures products under the SherwinWilliams, Dutch Boy, Krylon, Minwax, Thompson's Water Seal and other brands. In addition, to making coatings for the construction, industrial and transportation markets, Valspar sells consumer paints under the Valspar, Cabot Stain, Devine Color and other brands. The companies estimated annual savings of $280 million of with- in two years.
Sherwin-Williams and Valspar said they expect the deal to immediately increase earnings, excluding onetime costs.The transaction is expected to close by the end of the first quarter of 2017, subject to approval by Valspar shareholders, they added. The boards of directors of both companies have unanimously approved the deal.SherwinWilliams and Valspar said they expect antitrust regulators to approve the merger without requiring the sale of any businesses, or require "minimal divestitures" at most.)