Sherwin-Williams Acquire Valspar with $11.3 Billion Dollar Deal
It was revealed last month, in a joint announcement from Sherwin-Williams and the Valspar Corporation, that both companies had come to an agreement about a merger worth $11.3 billion. The boards of the two companies have reportedly unanimously assented to the agreement, which will see Sherwin-Williams acquire Valspar in the largest such deal in the history of either company. The deal is still subject to approval from shareholders and governmental regulators, but is expected to be finalised by first quarter end in 2017.
Illustrious Pasts, Promising Futures
Based in Minneapolis since 1806, Valspar operates over 50 manufacturing facilities covering 20 countries across six continents, making it one of the biggest paint and coatings manufacturer in the world. Valspar reported sales of $4.4 billion in 2015. Sherwin-Williams, on the other hand, has been in business since 1866, going from strength to strength since then to become a Fortune 500-listed company.
These strengths would be replicated and nurtured in the post-acquisition company, with Sherwin-Williams executives estimating annual sales of $15.6 billion that would give impressive net profits of $2.8 billion. Shareholders are also set to gain, as Sherwin-Williams will pay $113 for each share. This is a 41 per cent premium on Valspar’s average share price in March.
Not counting the one-time costs of the acquisition itself, Sherwin-Williams’ turnover will immediately increase as a result of the purchase of Valspar due to ‘cost synergies’ – decreases in operating costs due to the fact that the two companies complement each other’s key strengths. Valspar’s CEO went further, outlining the shared workplace culture and commitment to innovation and customer service.
Besides turnover, another aim of the acquisition is to turn the combined company into the single leading global paint and coatings manufacturer, rising above competitors AkzoNobel and PPG Industries. The combined company also brings benefits to customers, who can expect to enjoy greater technological and innovative capabilities within an expanded product range.
Sherwin-Williams’ president stated that the acquisition would be used to increase the global reach of the company, with a focus on emerging markets in the Asia-Pacific, the Middle East, Africa and Europe. While the company will retain its Cleveland headquarters and a base in Minneapolis, Sherwin-Williams will seek to address the imbalance it currently experiences, with 84 per cent of its sales coming from the US. The acquisition of Valspar allows the company to build upon an array of powerful technological innovations and a series of strong brands.
This has implications for international headhunters working to provide paint and coatings recruitment solutions over the next few years. Coatings recruitment organisations specialising in executive search can expect to see demand for trained personnel with experience in the sector – without them it would be impossible to realise the ambitions of management for global growth.
Experts and analysts have welcomed the news of the acquisition, suggesting that the deal, along with similar recent mergers in this branch of industry, could be the key to kick-starting growth in the sector, helping to combat the challenges of sluggish demand and the global price environment.