The Sherwin-Williams Co. announced a blockbuster deal to acquire The Valspar Corp. for $11.3 billion, a cash transaction that will combine the world’s third-largest and sixth-largest paint and coatings manufacturers and could vault the combined company to number one worldwide, based on revenue figures reported for the industry’s major companies.
Sherwin-Williams CEO John G. Morikis
The acquisition will “significantly expand” Sherwin-Williams’ market position in Asia-Pacific, Europe and the Middle East, and would add coil and packaging coatings to the company’s portfolio, Cleveland-based Sherwin-Williams said. The companies said the definitive agreement announced Sunday would pay $113 per share for Valspar—a significant premium over Valspar’s current stock price—$83.83 per share at the close of the market on Friday.
If completed, the acquisition would result in a company with annual revenue of approximately $15.6 billion—putting it in a contest with PPG Industries Inc. for the top spot in the rankings of the world’s biggest paint and coatings companies; PPG’s 2015 revenue totaled $15.3 billion. Akzo Nobel, based in The Netherlands, would slide from the second-largest paint and coatings company to No. 3 worldwide.
The companies said the deal is expected to close by the end of the first quarter of 2017, pending regulatory approvals that include clearance under the U.S. Hart-Scott Rodino antitrust act.
“Sherwin-Williams and Valspar have highly complementary paints and coatings offerings and this combination enhances Sherwin-Williams’ position as a premier global paints and coatings provider,” Sherwin-Williams said in a statement.
“The transaction results in an exceptional, diversified array of strong brands and technologies, accelerates Sherwin-Williams growth strategy by expanding its global platform in Asia-Pacific and EMEA, (Europe, the Middle East and Asia),” Sherwin-Williams said.
‘Sherwin-Williams reported 2015 revenue of $11.34 billion, a record high for the company; Valspar’s 2015 revenue totaled $4.39 billion.
The acquisition would deliver significant expansions to the Sherwin-Williams product mix, including both field-applied and high-end factory-applied coatings for the architectural market.
Valspar CEO Gary E. Hendrickson
Valspar’s product portfolio includes consumer paints and coatings, high-performance architectural coatings, packaging coatings, wood coatings, industrial coatings, and automotive coatings. Architectural paint and coatings include paints, stains and primers sold under the Valspar, Medallion, Duramax, Huaran, PlastiKote, Color Style, Devine Color, and Climate Zone labels, and wood coatings sold under the Valspar, Cabot Stain, Guardsman and McCloskey Man O’War labels.
Valspar’s high-performance architectural coatings portfolio includes factory-applied coil and extrusion products for building facades and other architectural elements. The “flagship” of this segment is the company’s Fluropon line of 70-percent polyvinylidene fluoride (PVDF) coatings, which are formulated to meet stringent performance criteria set by the AAMA 2604 specification of the American Architectural Manufacturers Association.
“Valspar is an excellent strategic fit with Sherwin-Williams,” said Sherwin-Williams President and CEO John G. Morikis. “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.
Valspar Chairman and CEO Gary E. Hendrickson said the acquisition “delivers immediate and certain cash value to our stockholders. We believe that Sherwin-Williams is the right partner to utilize our array of brands and create a premier global coatings company.”
Valspar descended from a small paint business founded in 1806 in Boston that went by the name Paint and Color. A series of ownership changes took the company to New York in 1870 and then to Rockford, Ill., following a 1950s merger with Rockcote. A 1970 merger with Minnesota Paints Inc. resulted in a headquarters move to Minneapolis. The company expanded significantly from the 1980s onward with an aggressive acquisition program, becoming one the 10 biggest paint and coatings companies in the world.
