Sherwin-Williams (NYSE: SHW) agreed to acquire Valspar (NYSE: VAL) for $11.3 billion, in an all-cash transaction.

The acquisition at $113 per share, which has been unanimously approved by the boards of directors of both companies, represents a premium of approximately 41% over Valspar’s 30-day average market price. The combined company will have pro forma 2015 Revenues and adjusted EBITDA of approximately $15.6 billion and $2.8 billion, respectively, with approximately 58,000 employees.

“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,” said Sherwin-Williams president and CEO, John G. Morikis. “Sherwin-Williams will continue to be headquartered in Cleveland and we intend to maintain a significant presence in Minneapolis.”

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

The transaction is expected to close by the end of the first quarter of 2017, and is subject to the approval of Valspar shareholders and customary closing conditions, including the expiration or termination of the applicable waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act and regulatory approvals in various other jurisdictions. Both companies believe that the combination will benefit customers and that it will receive all necessary regulatory clearances.

Given the complementary nature of the businesses and the benefits this transaction will provide to customers, Sherwin-Williams and Valspar believe that no or minimal divestitures should be required to complete the transaction. Under the terms of the merger agreement, in what both companies believe to be the unlikely event that divestitures are required of businesses totaling more than $650 million of Valspar’s 2015 revenues, the transaction price would be adjusted to $105 in cash per Valspar share. Sherwin-Williams would have the right to terminate the transaction in the event that required divestitures exceed $1.5 billion in 2015 revenues. These provisions provide Sherwin-Williams and Valspar with greater closing certainty.

Sherwin-Williams intends to finance the transaction through a combination of cash on hand, liquidity available under existing facilities and new debt. Sherwin-Williams has obtained committed bridge financing from Citigroup.

Citi acted as the lead financial advisor to Sherwin-Williams and J.P. Morgan Securities LLC also acted as financial advisor. Jones Day and Weil, Gotshal & Manges LLP are acting as legal advisors to Sherwin-Williams. Goldman Sachs and BofA Merrill Lynch are acting as financial advisors to Valspar and Wachtell, Lipton, Rosen & Katz is acting as its legal advisor.

Sherwin-Williams is a global leader in the manufacture, development, distribution, and sale of coatings and related products to professional, industrial, commercial, and retail customers. The company manufactures products under well-known brands such as Sherwin-Williams, HGTV HOME, Dutch Boy, Krylon, Minwax, Thompson’s Water Seal, and many more. Sherwin-Williams branded products are sold exclusively through a chain of more than 4,100 company-operated stores and facilities, while the company’s other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors. The Sherwin-Williams Global Finishes Group distributes a wide range of products in more than 115 countries around the world. The company was founded in 1866, and is headquartered in Cleveland, Ohio. Sherwin-Williams has a market capitalization of $25.2 billion.

Valspar is a global leader in the coatings industry providing customers with innovative, high-quality products and value-added services. Valspar offers a broad range of coatings products for the consumer market, and highly-engineered solutions for the construction, industrial, packaging and transportation markets. It has 11,000 employees worldwide serving customers in more than 100 countries. Founded in 1806, Valspar is headquartered in Minneapolis, Minn. Valspar’s sales in fiscal 2015 were $4.4 billion. The company has a market capitalization of $8.16 billion.

Facebooktwittergoogle_pluspinterestlinkedinmail

CONTACT US

Thank you for contacting ExitHub. We'll respond as soon as possible.

Sending

© 2018 ExitHub Inc. All Rights Reserved.

Log in with your credentials

or    

Forgot your details?

Create Account