Sher­win-Wil­liams paint com­pany to buy Valspar for $9.3 bil­lion

The Pak Banker - - COMPANIES/BOSS -

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.)

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