Sherwin-Williams Buys Rival Valspar for $9.3B

The combination of paint industry giants will give Sherwin more access to do-it-yourself painters and expand its global presence.
Katie Kuehner-HebertMarch 21, 2016

In a merger of paint industry giants, Sherwin-Williams is acquiring Valspar to expand its global paints and coatings business and accelerate its overseas growth.

The two companies on Sunday announced Cleveland-based Sherwin would buy Minneapolis-based Valspar for about $9.3 billion in cash. The $113-per-share deal represents a premium of roughly 35% to Valspar’s closing price on Friday.

The merger will create a company with combined revenue of about $15.6 billion, adjusted annual earnings of $2.8 billion and about 58,000 employees.

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“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],” Sherwin-Williams CEO John Morikis said in a news release.

Sherwin makes paint under the Sherwin-Williams, Dutch Boy, Krylon, Minwax, Thompson’s Water Seal and other brands but is better known for its retail stores that cater to contractors and the architectural trades.

Valspar’s consumer paints include the Valspar, Cabot Stain, Devine Color and other brands.

“The purchase would give Sherwin another brand and more access to do-it-yourself painters, who tend to buy their supplies at big retailers rather than at the contractor-oriented stores owned by Sherwin,” the Wall Street Journal said, noting that retailers such as Home Depot, Lowe’s and Walmart have been taking market share away from independent paint stores.

Sherwin-Williams would also expand its global footprint. The U.S. accounts for about 84% of its sales but the Valspar deal would reduce that amount to about 76% by adding sales in Asia and Europe, according to the company.

Sherwin and Valspar say their businesses are complementary and, as a result, they expect “no or minimal” divestitures should be required to complete the deal. But if antitrust regulators require divestitures totaling more than $650 million of Valspar’s 2015 revenues, the transaction price would be adjusted to $105 per Valspar share.