US paint maker Sherwin-Williams to buy rival Valspar Corp for $9.3 bn
21 March 2016
US paint maker The Sherwin-Williams Co, yesterday struck a friendly deal to buy rival Valspar Corp for about $9.3 billion in cash, in order to create a premier global paints and coatings company.
Under the terms of the deal, Sherwin-Williams will pay $113 a share, a premium of about 41 per cent to Valspar's volume weighted average price for the 30 days through 18 March.
The total deal value is around $11.3 billion including debt and equity.
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, both companies said in a statement.
Post closing, both companies expect to achieve annual synergies of $280 million in sourcing, SG&A and process and efficiency savings within two years and targets long-term annual synergy target of $320 million.
Sherwin-Williams intend to finance the deal through a combination of cash on hand, liquidity available under existing facilities and new debt.
It said that it has obtained committed bridge financing from Citigroup GlobalMarkets Inc.
The deal is subject to shareholder and regulatory approval and is expected to close by the end of March 2017.
Founded in 1866 by Henry Sherwin and Edward Williams, the company manufactures and sells coatings and related products to professional, industrial, commercial, and retail customers.
The company's portfolio of products includes well-known brands such as Sherwin-Williams, HGTV HOME, Dutch Boy, Krylon, Minwax, Thompson's Water Seal, and others.
Its branded products are sold exclusively through a chain of over 4,100 company-operated stores and facilities, while the company's other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors.
The Sherwin-Williams Global Finishes Group distributes a wide range of products in more than 115 countries around the world.
The Cleveland, Ohio-based company has a market cap of and net income of $866 million on revenue of $11.3 billion last year.
Founded in 1806, Minneapolis-based Valspar is a global leader in the coatings industry providing customers with high-quality products and value-added services in more than 100 countries.
The New York Stock Exchange-listed company offers a broad range of superior coatings products for the consumer market, and highly-engineered solutions for the construction, industrial, packaging and transportation markets.
The company reported net sales in fiscal 2015 of $4.4 billion.
Valspar CEO and chairman Gary Hendrickson, said, "We believe that Sherwin-Williams is the right partner to utilize our array of brands and create a premier global coatings company. … The combination of Sherwin-Williams and Valspar will benefit our customers, employees and other stakeholders.''
John Morikis, president and CEO of Sherwin-Williams, said, ''Valspar is an excellent strategic fit with Sherwin-Williams. 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 Asia-Pacific and EMEA.''