PaintSquare.com
      | Connect Follow us on Twitter Like us on Facebook
About | Subscribe | Advertise
  

 

Download our free Wastewater Treatment Coating Systems eResource Book

Paint and Coatings Industry News

Main News Page


Mexico Again Rejects Sherwin Deal

Friday, November 1, 2013

More items for Coating Materials

More items from Latin America; North America

Comment | More

Mexican anti-trust regulators have once again blocked Sherwin-Williams’ push for Latin American domination, nixing the Cleveland company’s $2.34 billion bid for rival Consorcio Comex, S.A. de C.V., the largest paint company south of the U.S. border.

In a major, and clearly unexpected, setback announced Wednesday (Oct. 30), Mexico's Federal Economic Competition Commission rejected the acquisition for the second time in three months, leaving the year-long takeover attempt in jeopardy.

Unlike the 3-2 vote in July to reject, the commission's vote was unanimous this time, a Sherwin-Williams spokesman said.

The deal would have doubled Sherwin-Williams' coating business in Latin America.

Comex
Images: Sherwin-Williams

Sherwin-Williams acquired 314 Comex stores in Canada and the U.S. in September.

Announcement of the rejection came five days after Sherwin-Williams' third-quarter earnings report, which reported higher profits in the Paint Stores Group but reduced the company's full-year earnings guidance.

Reviewing Options

The "Federal Economic Competition Commission of Mexico informed the company last evening that the company’s appeal relating to its pending acquisition of Consorcio Comex, S.A. de C.V. was denied and the acquisition is not authorized," Sherwin-Williams' statement said.

"The company is currently reviewing the Commission’s decision and is considering all options, including whether to refile with the Commission."

Sherwin-Williams said it would reveal its next move in a conference call at 11 a.m. ET Friday (Nov. 1). An archived replay of that live webcast will be available at www.sherwin.com beginning about two hours after the call ends.

Mexico's Federal Competition Commission was established in 1993 to enforce the country's then-new Federal Law of Economic Competition. As such, the commission regulates mergers and acquisitions and is charged with preventing monopolistic behavior.

Comex Deal

The Comex deal, announced last November, would be the biggest acquisition in Sherwin-Williams' 147-year history.

Sherwin-Comex market

In a 2011 investor presentation, Sherwin-Williams discussed "Why Comex Makes Sense" as an acquisition. The blue and gray states represent Sherwin-Williams' market penetration: Dark blue states have less than 30,000 households per store. The lighter the color, the less penetration. Gray states have more than 50,000 households per store.

Part of that deal—the $90 million cash acquisition of Comex's North American business—sailed through the regulatory process in both the U.S. and Mexico and closed in September, adding 314 stores and eight manufacturing sites to Sherwin-Williams' 3,500-plus stores across the U.S. and Canada.

But the lion's share of Comex's business, which dominates Latin America, has now twice run afoul of Mexico's regulators, blocking Sherwin-Williams' expansion in a fast-growing market where it currently has little presence.

'Artificially High Prices'

In rejecting the deal for the first time in July, the commission said the acquisition would give the combined company 48 to 58 percent of the regional market share—10 times that of its closest competitor.

“It would have been able to set artificially high prices and commit anti-competitive practices to the detriment of consumers,” the commission said, as reported by Bloomberg.

The companies appealed the decision, prompting a second review.

Sherwin-Williams Paint Stores

Sherwin-Williams called the two architectural coatings giants a "good strategic fit."

Founded in 1952, Comex operates eight manufacturing sites in Mexico and is the fourth-largest architectural paint manufacturer in North America. It also manufactures industrial, protective and specialty coatings.

Its brands include General Paint, Parker Paint, Frazee Paint, Kwal Paint and Color Wheel.

Confidence and Disappointment

Both Sherwin-Williams and Comex had clearly been assuming the sale would be approved.

In announcing the deal last year, Sherwin-Williams chairman and CEO Christopher M. Connor called it "an exciting step forward in our ongoing effort to bring these two respected companies together" and said the companies were a "good strategic fit."

Sherwin-Williams HQ

Cleveland-based Sherwin-Williams honored its hometown with a 10-story banner in May.  The company had high hopes for the Comex acquisition.

Meanwhile, Comex CEO Marcos Achar Levy said his company was "delighted" by the deal and looked "forward to making a major contribution to [Sherwin-Williams'] ongoing success across the Americas."

And just last week, in its third-quarter earnings report, Connor said the company was "positioned well for the anticipated closing of the Comex Mexico acquisition...."

After the first rejection in July, Connor said he was "disappointed by this decision, but remain[ed] hopeful that we can adequately address the commission's objections and proceed with the transaction."

In a conference call at the time, Connor told reporters and analysts that Sherwin-Williams had "been represented in talks with the commission by outside counsel in Mexico City and members of the company's management team," Crain's Cleveland Business reported.

"Asked at the time whether the commission's decision was a surprise in light of those discussions, Mr. Connor declined to characterize it in that manner, saying instead, 'We'll just leave it as a disappointment.'”

Editor's Note: This article was corrected at 8:45 a.m. ET Nov. 1 to indicate that the Federal Economic Competition Commission's latest vote was unanimous. PaintSquare News regrets the error.

   

Tagged categories: Acquisitions; Architectural coatings; Comex; Government; Market share; Paint and Coating Sales; Regulations; Sherwin-Williams

Comment from Billy Russell, (11/1/2013, 1:16 PM)

Great move Mexico, stand your ground


Comment Join the Conversation:

Sign in to our community to add your comments.

BASF
New resins from BASF will have metals loving water:

Excellent corrosion resistance, low VOC, high gloss, thin films basf.us/industrialcoatings
polyorders@basf.com
800-231-7868


Carboline Company
Hydrocarbon Fire & Jet Fire Protection

Pyroclad X1 is the latest breakthrough in epoxy based intumescent fireproofing technology


International Paint LLC

International Paint Engineered Coatings

Learn about our solutions for:
  • Structural Steel
  • Piping & Equipment
  • Storage Tanks
  • Pressure Vessels
  • Secondary Containment


    Jessup Manufacturing Company
    More Traction for Extreme Marine Conditions

    Jessup Safety Track® 3800 Military Grade peel-and-stick non-skid tapes and treads provide extra slip resistance for decks. MIL-PRF-24467C Type XI, Black & Gray.


    Polyval Coatings
    Polyflex® Polyurea Linings

    Polyflex™ new Polyurea Geotextile Membrane System has been specifically engineered to protect the environment in containment applications.
    www.polyflexlinings.com


    HoldTight Solutions Inc.
    NO FLASH RUST -
    NO CONTAMINANTS

    Our HoldTight®102 salt remover & flash rust preventer prevents flash
    rust by removing surface contaminants. It has no equal; only wannabees.
    Contact us for your
    nearest distributor.
    (800) 319.8802 sales@holdtight.com


    Commercial Sand Blasting & Painting Ltd.
    Reliable Service & Superior Workmanship

    We’re ready to meet any of your protective coating and lining needs. We can work on your site or in our facilities, with large shops (60,000 sq ft), 40 acres of yard space, and cranes and forklifts on site.


    Mitsubishi Gas Chemical America
    Performance Amine 1,3-BAC

    A highly reactive cycloaliphatic diamine offering superior performance. Reasonable cost and curing efficacy makes it suitable for all types of epoxy resin applications.


    Wasser High-Tech Coatings Inc.
    Wasser Coatings Protect

    Wasser Coatings offer a complete range of Moisture Cure Urethane (NEPCOAT approved) systems in addition to Polyurea membranes and linings(NSF).
    www.wassercoatings.com


    Sherwin-Williams
    Sherwin-Williams Protective & Marine Coatings

    With 4,000 distribution points and 3,700+ years of experience, Sherwin-Williams delivers the products, support and expertise you need, right where you need it.

  •  
     
     
    Technology Publishing

    The Technology Publishing Network

    The Journal of Protective Coatings & Linings (JPCL) PaintSquare
    Durability + Design Paint BidTracker

     
    EXPLORE:      JPCL   |   PaintSquare News   |   Interact   |   Buying Guides   |   Webinars   |   Resources   |   Classifieds
    REGISTER AND SUBSCRIBE:      Free PaintSquare Registration   |   Subscribe to JPCL   |   Subscribe to PaintSquare News
    MORE:      About PaintSquare.com   |   Privacy policy   |   Terms & conditions   |   Site Map   |   Search   |   Contact Us
     

    © Copyright 2000-2015, Technology Publishing / PaintSquare, All rights reserved
    2100 Wharton Street, Suite 310, Pittsburgh PA 15203-1951; Tel 1-412-431-8300; Fax 1-412-431-5428; E-mail webmaster@paintsquare.com