Axalta Completes $420M Valspar Unit Buy
Philadelphia-based Axalta Coating Systems on Thursday (June 1) finalized a deal to acquire Valspar Corporation’s North American Wood Coatings unit for $420 million in cash.
The acquisition, which was first announced April 12, closed hours after The Sherwin-Williams Company (Cleveland) completed its purchase of Minneapolis-based Valspar for $11.3 billion, creating the world’s largest coatings firm.
Valspar divested the business in connection with the antitrust approval of its acquisition by Sherwin-Williams. The purchase price of $420 million is subject to certain adjustments set forth in the Asset Purchase Agreement.
Valspar's North American Industrial Wood Coatings unit had revenues of about $225 million in 2016. It produces coatings and finishes for OEM and industrial markets—under the Valspar Wood, Zenith, Lustre Lac and Grainstone labels—for products such as kitchen cabinets, furniture, hardwood floors, automotive finishes, pianos and hockey sticks.
During the three-month period ending April 28, Valspar reported just under $1.1 billion in net sales, up from just under $1.06 billion during the same period in 2016.
“This is an outstanding opportunity for Axalta to enter the large Industrial Wood Coatings market with an industry-leading portfolio of products and customers,” Axalta Chairman and CEO Charlie Shaver said in April. “The strong reputation enjoyed by these brands among a long-term customer base will provide an excellent platform for future growth in this important market.
“Our shared commitment to technology and excellence in application services, as well as a strong pipeline of new products, will enable us to meet the needs of both current and new customers. This acquisition continues to build on our strategy to strengthen and further diversify our Performance Coatings segment.”
Axalta, which has about 13,000 employees, furnishes OEM coatings for light vehicles and commercial vehicles, and refinish applications for electric motors, buildings and pipelines. Shares of its stock nudged up 21 cents to $32.89 in Friday morning trading.
Axalta furnishes coatings for light OEM vehicles and commercial vehicles, and refinish applications for electric motors, buildings and pipelines.
“We believe that Axalta is an excellent buyer for our North American Industrial Wood Coatings business and will provide great opportunities for our talented employees,” said Valspar Chairman and CEO Gary E. Hendrickson when the deal was first announced. “Axalta is a strong cultural fit with Valspar and shares our commitment to innovation and customer service. We will work closely with Axalta to ensure a smooth transition of this business.”
The Federal Trade Commission, approving the move as a way to prevent anticompetitive behavior in the industrial wood coatings segment, noted, "As one of the leading suppliers of coatings to large automotive and industrial original equipment manufacturers, Axalta is well positioned to operate these assets as an effective competitor that will maintain competition in the markets that would otherwise be affected by the merger."