Sherwin-Williams to Buy Valspar for $9.3 Billion
By MICHAEL J. de la MERCED

Sherwin-Williams’s famous logo shows a can of red paint pouring over a globe with the slogan “Cover the Earth.”

On Sunday, the paint maker took a step toward that goal by buying a big rival, Valspar, for $9.3 billion.

If completed, the deal would create a new paint giant whose lines of paints are sold in North America, Europe and Asia. But the structure of the transaction also showed some unusual concessions that the companies would make if their proposed union ran into regulatory hurdles.

Under the terms of the deal, Sherwin-Williams would pay $113 a share in cash, up nearly 35 percent from Valspar’s closing price on Friday.

Including the assumption of Valspar’s debt, the enterprise value of the transaction would be about $11.3 billion.

Combining with Valspar would bolster Sherwin-Williams’s presence outside the United States and Canada. And it would add new product lines for Sherwin-Williams, such as coatings for food and industrial coils.

Together, the two companies reported $15.6 billion in sales last year, ahead of PPG Industries’ $15.3 billion and just behind Akzo Nobel’s $16.5 billion.

“We believe it expands and extends our capabilities into new geographies,” John G. Morikis, Sherwin-Williams’s chief executive, said of the deal in an interview on Sunday. “This is something we’ve looked for and believed would make a good fit for many years.”

Sherwin-Williams said it also expected the deal to eventually yield as much as $320 million in annual cost savings within about four years.

The two companies said they did not expect problems with antitrust regulators, arguing that they have complementary operations. But they have agreed that if the government required divestitures of businesses totaling more than $650 million in Valspar’s 2015 revenues, the price of the deal would fall to $105 a share in cash.

And if more than $1.5 billion in businesses would need to be sold, Sherwin-Williams would have the right to walk away.

Mr. Morikis played down any suggestion that the antitrust challenges would be insurmountable.

“We’re confident in getting regulatory approval,” he said. Of the potential price cut, he added, “This gives clear and greater certainty should it take a different path.”

While the transaction is expected to lead to a downgrade of Sherwin-Williams’s credit rating from A2 — because the deal will involve borrowing as well as using cash on hand — the company expects to maintain an investment-grade rating, according to its chief financial officer, Sean Hennessy.

Mr. Hennessy added that the paint maker expects to reduce its ratio of debt to earnings before interest, taxes, depreciation and amortization to below four in about two years.

The deal was struck only months after Mr. Morikis, a Sherwin-Williams corporate manager for many years, was appointed chief executive, succeeding the company’s longtime leader, Christopher Connor.

The combined paint maker would remain based in Sherwin-Williams’s headquarters in Cleveland, though it would keep a “significant presence” in Minneapolis, Valspar’s home.

The deal is expected to close by next March, pending approval from Valspar’s shareholders and government regulators.

Citigroup, JPMorgan Chase and the law firms Jones Day and Weil, Gotshal & Manges advised Sherwin-Williams.

Goldman Sachs, Bank of America Merrill Lynch and the law firm Wachtell, Lipton, Rosen & Katz advised Valspar.

全球塗料雙雄 整併成一哥

全美最大、全球第三大塗料商宣偉（Sherwin Williams）同意以93億美元現金收購同業Valspar，併購後將一躍而成為全球塗料龍頭。

宣偉20日宣布將以每股113美元收購Valspar，相較於該公司18日收盤價83.33美元，約等於溢價35%。

宣偉執行長莫里基斯（John Morikis）上任未滿三個月，積極推動該公司歷來規模最大的交易案。

宣偉的84%營收來自美國，Valspar則有半數以上營收來自海外，同時也經營卷材塗料與包裝塗料。莫里斯基表示，Valspar將能協助宣偉在亞太及歐洲地區擴張。

Longbow研究公司分析師席爾瓦斯坦說，這樁併購案深具戰略意義。併購Valspar讓宣偉得以提高在美國DIY油漆市場、海外市場，以及工業塗料市場的占有率。

原文參照：
http://www.nytimes.com/2016/03/21/business/dealbook/sherwin-williams-to-buy-valspar-for-9-3-billion.html

2016-03-22．經濟日報．A8．國際．編譯黃智勤