Follow us on Twitter Follow us on LinkedIn Like us on Facebook Follow us on Instagram Visit the TPC Store
Search the site


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.

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 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.

Sherwin-Williams Oil & Gas App
Our coatings and linings expertise available 24/7, allowing you to explore the best Sherwin-Williams solutions for oil refineries, shale drilling sites, and offshore. Android users
click here. Download today!

Jotun Paints Inc.
Jotachar JF750 - The Time Saving Solution
The only mesh free solution for jet fire scenarios. Jotachar saves installation time and material costs - the next generation of epoxy passive fire protection.

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.

SAFE Systems, Inc.
SAFE Systems'
Blast Lights &
Deadman Switches
Halogen or LED blast lights available with our NEW urethane bumper. Switches available in many colors for color coding your hoses.

W Abrasives
Steel Abrasives from
W Abrasives
As the global leader in steel abrasives, W Abrasives material is the efficient and eco-friendly solution blasting with you to reach the perfect profile.

HoldTight Solutions Inc.
Our HoldTight®102 salt remover & flash rust
preventer prevents flash
rust by removing surface contaminants. Contact us
for your nearest distributor.
(800) 319.8802

Sidewinder/Persyst Enterprises, Inc.
The Sidewinder Model M2 Solvent Recycler
Combat the rising cost of gunwash, thinners, acetone & more while drastically reducing waste disposal coat.

Blastox/The TDJ Group, Inc.
Webinar On BLASTOX® for One Step Lead Abatement
Why Blastox® is truly “One Step”
• Comparison to other lead abatement methods
• Blastox® stabilization & coatings performance
• Collecting waste samples
• COST $AVING$ using Blastox®

Absolute Equipment/Grand Rental Station
We have Tier 4 Equipment including Air Compressors & Generators for Sale & Rent! Your job may now require Tier-4. or Call 412-931-6655.

PPG Protective and Marine Coatings Group
We Protect and Beautify the World
PPG is widely recognized as a world leader in protective and marine coatings, developing innovative, cutting-edge products and services.


Technology Publishing Co., 2100 Wharton Street, Suite 310, Pittsburgh PA 15203-1951

TEL 1-412-431-8300  • FAX  1-412-431-5428  •  EMAIL

The Technology Publishing Network

Durability + Design PaintSquare the Journal of Protective Coatings & Linings 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   |   Privacy policy   |   Terms & conditions   |   Site Map   |   Search   |   Contact Us