Sherwin-Williams Takes Valspar for $11.3 billion
US paint company Sherwin-Williams is to acquire rival firm Valspar for $11.3 billion in an all-cash deal.
Sherwin-Williams will pay $113 per share, which represents a premium of around 41% on Valspar’s volume weighted average price for the 30 days up to and including Mar. 18.
The transaction has been unanimously approved by both boards and is expected to close by the end of quarter one 2017, subject to the approval of Valspar shareholders and the usual closing conditions.
Describing Valspar as an excellent strategic fit, John Morikis, president and CEO of Sherwin-Williams, said: “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, Middle East and Africa).”
The combined company would have pro forma 2015 revenues of approximately $15.6 billion and adjusted EBITDA of $2.8 billion (including estimated annual synergies), with around 58,000 employees. The transaction is expected to immediately increase earnings, excluding one-time costs.
Estimated annual synergies of $280 million are expected to be realized within two years in the areas of sourcing, process and efficiency.
As both businesses are highly complementary, the companies believe that no or minimal divestments would be required to satisfy antitrust regulators. However, they said in the unlikely event that businesses totaling more than $650 million of Valspar’s 2015 revenue had to be sold, the transaction price would be adjusted to $105 per Valspar share.
Sherwin-Williams would have the right to terminate the deal if required divestments exceed $1.5 billion in 2015 revenues.
The transaction is to be financed through a combination of cash on hand, liquidity available under existing facilities and new debt.
Sherwin-Williams will remain headquartered in Cleveland; Valspar is based in Minneapolis.
