US Sherwin-Williams to acquire Valspar in $11.3bn deal

DALLAS (ICIS)–Sherwin-Williams is to acquire fellow paints and coatings firm Valspar for $11.3bn, the US companies said on Sunday.

Under the definitive agreement, Sherwin-Williams will acquire Valspar for $113 per share in an all-cash transaction, or an enterprise value of approximately $11.3bn, the two firms said in a statement. 

“Sherwin-Williams has a long track record of successfully integrating acquisitions. We are highly confident in the industrial logic of the transaction and, once closed, our ability to achieve $280 million of estimated annual synergies,” said Sherwin-Williams president and CEO John Morikis.

The transaction, which has been unanimously approved by the boards of directors of both companies, is expected to close by the end of Q1 calendar year 2017 and is subject to the approval of Valspar shareholders and customary closing conditions, the companies said.

The deal represents a premium of approximately 41% to Valspar’s volume weighted average price for the 30 days up to and including March 18, 2016, the joint statement 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,” Morikis said.

“We expect this transaction to be immediately accretive excluding one-time costs and meaningfully enhance our cash flow generation profile,” he added.

The combined company would have pro forma 2015 revenues and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), including estimated annual synergies, of approximately $15.6bn and $2.8bn respectively, with approximately 58,000 employees.

“We are pleased to announce this compelling transaction, which delivers immediate and certain cash value to our stockholders. We believe that Sherwin-Williams is the right partner to utilise our array of brands and create a premier global coatings company,” said Gary Hendrickson, Valspar chairman and CEO.

“Together we will continue to build on the solid momentum our team has worked so hard to create, he added.”