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Sherwin Williams to buy Valspar in deal worth 6.4bn

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Sherwin-Williams the US based paint manufacturer has agreed to acquire their U.S. competitor Valspar, in a cash deal valued at around £6.4bn.

In a statement issued earlier today, Sherwin-Williams have agreed to pay $113 a share, a premium of around 41% to Valspar's weighted average price for the 30 days through to Friday 18th March.

In the press release, Sherwin-Williams Chief Executive John Morikis 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 the Asia-Pacific Europe, the Middle East and Africa."  

The new company would have a combined turnover of around £10.7bn, EBITDA of £1.9bn, and about 58,000 employees. It is understood that Sherwin-Williams will remain headquartered in Cleveland, whereas the Valspar head office is in Minneapolis. 

Sherwin-Williams manufactures products under the Sherwin-Williams, Dutch Boy, Krylon, Minwax, Ronseal, Thompson's Water Seal and other brands. In addition, to making coatings for the construction, industrial and transportation markets, Valspar sells consumer paints under the Valspar, Cabot Stain, Devine Color and other brands. 

The transaction is expected to be completed by the end of Q1 2017, subject to approval by Valspar shareholders. The boards of directors of both companies have already unanimously approved the deal. The companies estimated that they could deliver total annual savings of around £190m within two years. 

The impact on the UK Paint market is interesting, as the acquisition will strengthen Sherwin Williams position with Kingfisher and B&Q, as they will now own both Valspar and Ronseal.

Source: Insight DIY Team.

21 March 2016

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