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FTC Reviews Acquisition

Monday, May 16, 2016

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As part of The Sherwin-Williams Company’s pending acquisition of The Valspar Corporation, the companies have been asked to provide additional information and documentary material to federal regulators.

The U.S. Federal Trade Commission made this request as a routine part of the regulatory process under notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the companies jointly announced Wednesday (May 11) afternoon.

FTC
Official Seal

Both Valspar and The Sherwin-Williams Company received requests from the Federal Trade Commission for additional information and documentation in connection with the deal.

The “second requests” from the FTC were expected, the companies said, noting that they are fully cooperating with the antitrust agency. Market experts say that the “net effect” of the inquiries will extend the timeline for the transaction and increase the risk.

The coatings companies still anticipate that the deal will close by the end of the first quarter in 2017. Upon completion, the $11 billion deal  would create the world’s largest paint and coatings producer.

‘Transformational’ Deal

Sherwin-Williams and Valspar announced the proposed deal in March, describing it as a “transformational transaction” and “perfect fit.”

The acquisition, the largest in Sherwin-Williams’ 150-year-history, would increase the company’s global footprint in Asia-Pacific and Europe, the Middle East and Africa (EMEA) and add new capabilities in the packaging and coil segments, Sherwin-Williams President and CEO John G. Morikis said at the time.

Ultimately, the transaction is about growth, Morikis said. Sherwin-Williams, based in Cleveland, currently gets 84 percent of its sales from the U.S. The Valspar acquisition would accelerate Sherwin-Williams' strategy to bring scale and platform to other regions as well as build upon strong brands and technology, Morikis added.

Leaders
Sherwin-Williams

Sherwin-Williams President and CEO John G. Morikis (left) and Gary E. Hendrickson, Valspar's chairman and CEO, referred to the deal as a "perfect fit" in announcing the transaction.

Sherwin-Williams said that the combined company would have sales of approximately $15.6 billion and adjusted earnings of $2.8 billion, with approximately 58,000 employees.

Founded in 1806, Minneapolis-based Valspar currently operates 57 manufacturing facilities across 20 countries and six continents.

Under terms of the agreement, Sherwin-Williams can terminate the proposal if more than $1.5 billion of divestitures are necessary for antitrust approval. In addition to antitrust approval, Valspar’s shareholders also must also approve the deal.

   

Tagged categories: Acquisitions; Asia Pacific; Business matters; Business operations; Coating Materials; Coatings manufacturers; EMEA (Europe, Middle East and Africa); Federal Trade Commission; Latin America; Mergers; North America; Sherwin-Williams; Valspar

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