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Sherwin-Williams Gets Comex U.S. Unit

Friday, September 20, 2013

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While the lion's share of the deal remains on hold, Sherwin-Williams has completed acquisition of the North American paint business of Consorcio Comex, S.A. de C.V., the companies announced this week.

The Cleveland-based paint and coatings maker will pay $90 million in cash and assume about $75 million in liabilities for Comex's 314 stores and eight manufacturing sites in the United States and Canada, Sherwin-Williams said Monday (Sept. 16).

The North American business, however, is just the tip of the Comex iceberg.

The Mexico City-based manufacturer boasts the world's largest exclusive paint retail network and is the leading architectural paint and coating producer in Mexico and Central America, with 3,300 points of sale operated by 750 concessionaires.

Comex also produces industrial, protective and marine coatings. But acquisition of the Latin American assets—originally, a $2.34 billion bid—is still pending before Mexican regulators.

Sherwin-Williams said Monday that it had taken steps to keep the entire deal on track.

314 New Stores

 The North American deal includes 314 Comex stores (234 in the U.S. and 80 in Canada) as well as eight manufacturing sites. Comex also supplies paint and coating products to about 1,500 external retailers in Canada. The company's brands include Frazee, Kwal, Parker Paints, General Paints, Color Wheel and Para.

Comex Group
Comex Group

The Comex Group has more than 3,000 stores, including 314 in North America that have now been sold to Sherwin-Williams.

"Both Sherwin-Williams and Comex place heavy emphasis on supplying high-quality architectural paints and coatings products in the U.S. and Canada," Sherwin-Williams said in a release.

Sherwin-Williams owns 3,542 paint stores, and its Paint Stores Group performance helped drive record sales for the company in the second quarter. The Comex NA acquisition will give Sherwin-Williams 3,856 stores.

'Exciting Step Forward'

Sherwin-Williams Chairman and CEO Christopher M. Connor called the North American deal "an exciting step forward in our ongoing effort to bring these two respected companies together."

He added, "The Comex business model in the U.S. and Canada is a good strategic fit for Sherwin-Williams and will improve our ability to serve customers in some of our most important geographic markets.”

Latin American Goals

The Latin American piece of the deal remains unresolved, but Sherwin-Williams appears confident that it is on track.

The company announced last November that it planned to buy the Comex Group for $2.34 billion, to extend the Cleveland firm's footprint in the Americas.

“This agreement enables us to complement our presence throughout Latin America, in markets where our presence is very limited,” Connor said at the time.

In July, however, Sherwin-Williams announced that The Federal Competition Commission of Mexico had rejected the deal in a 3-2 vote.

Connor said Sherwin-Williams was "disappointed by this decision, but remain hopeful that we can adequately address the Commission's objections and proceed with the transaction."

Sherwin-Williams stores
Sherwin-Williams

Sherwin-Williams' acquisition of all of Comex Group stores would marry the largest company-owned networks of paint stores in North and Central America.

On Aug. 21, a Sherwin-Williams spokesman said in an email that the company was "continuing the appeals process."

Committed to Deal

On Monday, Sherwin-Williams expressed confidence that the Mexican piece of the acquisition would still completed.

"Sherwin-Williams and Comex remain fully committed to securing regulatory approval from the Federal Competition Commission of Mexico for Sherwin-Williams to complete the acquisition of the operations of Comex in Mexico," Sherwin-Williams said in a release.

"To that end, the Stock Purchase Agreement was amended to extend the exclusivity period to March 31, 2014."

Sherwin-Williams said it would provide additional information about the Comex deal in its third-quarter earnings conference call Oct. 25.

 

   

Tagged categories: Acquisitions; Architectural coatings; Coatings manufacturers; Comex; Sherwin-Williams

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