25th October 2020

SHERWIN-WILLIAMS ACQUIRING VALSPAR

Sherwin-Williams Co. is buying Valspar Corp. in a deal the buyer says is worth $11.3-billion. The purchaser has agreed to pay $113 per share. Valspar has more than doubled in value in the past five years, and grew well beyond the norm on the Standard and Poors 500 Index.

The purchase gives Sherwin-Williams broader access to do-it-yourself painters, who mostly buy their supplies at big retailers rather than at the contractor-oriented stores owned by Sherwin-Williams. Valspar, reportedly, has a strong connection with Lowe’s and Ace hardware stores in the US.

John G. 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 [Europe, the Middle East and Africa].

"Customers of both companies will benefit from our increased product range, enhanced technology and innovation capabilities, and the transaction’s clearly defined cost synergies. We have tremendous respect for the expertise and dedication of the Valspar team and we are excited about the opportunities that this combination will provide to both companies’ employees. Sherwin-Williams will continue to be headquartered in Cleveland and we intend to maintain a significant presence in Minneapolis.”

Valspar is also strong in coatings for food and beverage packaging, and for steel coils. Last year's combined sales for the two firms were about $15.6-billion. This is rather more than $1-billion above PPG Industries Inc., and substantially larger than the next-biggest supplier in the field, AkzoNobel NV, with $11.1 billion. Sherwin-Williams values the deal at $11.3-billion, including the assumption of debt.

The proposal includes a cut to the purchase price should antitrust regulators demand aggressive divestitures. If the buyer is forced to sell businesses representing more than $650-million of Valspar’s 2015 revenue, the price drops by $8 a share. Sherwin could walk away entirely if divestitures climb to $1.5-billion of revenue.

www.sherwin-williams.com