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Two major U.S. paint companies will soon be consolidating, if all goes as planned.
On Sunday, The Sherwin-Williams Company and The Valspar Corporation together announced they had entered into an agreement in which Sherwin-Williams will acquire Valspar for $11.3 billion.
Combining the two companies’ paints and coatings lines will help boost Sherwin-Williams as a premier global paints and coatings provider, according to Sherwin-Williams.
“Valspar is an excellent strategic fit with Sherwin-Williams,” says John G. Morikis, president and CEO of The Sherwin-Williams Company. “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.”
Sherwin-WIlliams will continue to be headquartered in Cleveland, but the company will also maintain operations in Minneapolis, where Valspar is headquartered.
The companies expect the transaction to be complete by the end of the first quarter of 2017, subject to the approval of Valspar shareholders and customary closing procedures.
Sherwin-Williams plans to finance the transaction through a combination of cash on hand, liquidity available under existing facilities and new debt.
“We are pleased to announce this compelling transaction, which delivers immediate and certain cash value to our stockholders,” says 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. We look forward to positioning Valspar to enter its next phase of growth and success and to working closely with Sherwin-Williams to seamlessly close this transaction.”
After the merger, the companies expect to achieve $280 million of estimated annual synergies in the areas of sourcing, process and efficiency savings within two years.
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.
