Sherwin-Williams has announced plans to acquire Valspar for approximately $11.3 billion including debt.
At $113/share, the transaction represents a premium of approximately 35% to Valspar’s closing price on 18 March. The deal values Valspar at 16 times its 2015 Ebitda of approximately $700 million.
Valspar posted net sales of $4.4 billion in its fiscal year ended 30 October 2015. Valspar’s industrial and packaging coatings segment, which generally sells to OEMs, accounted for 57% of sales. Consumer paints, which includes consumer paints and automotive refinish, accounted for 39% of sales. Valspar also has a resins and specialty colorants business that accounts for less than 5% of sales.
Sherwin-Williams and Valspar combined would have had pro forma 2015 Revenues and adjusted Ebitda of approximately $15.6 billion and $2.8 billion. That would place it just ahead of PPG Industries, which had 2015 revenue of $15.3 billion, as the largest global coatings maker.
The transaction is expected to close by the end of first-quarter 2017, subject to approval by Valspar shareholders and regulatory clearance. Sherwin-Williams and Valspar say they believe that “no or minimal divestitures should be required to complete the transaction.” Under the terms of the deal, however, in the event that divestitures are required of businesses totaling more than $650 million of Valspar’s 2015 revenues, the transaction price would be reduced to $105/share. Sherwin-Williuams would have the right to terminate the transaction in the event that required divestitures exceed $1.5 billion in 2015 revenues. Sherwin-Williams says it expects to generate annual cost savings of $280 million by the end of 2018.
Sherwin-Williams says the deal will accelerate its growth strategy by expanding its global platform in Asia-Pacific and Europe, and also adds capabilities in the packaging and coil segments. “Valspar is an excellent strategic fit,” says John G. Morikis, Sherwin-Williams president and CEO. “The combination expands our brand portfolio and customer relationships in North America, significantly strengthens our global finishes business, and extends our capabilities into new geographies and applications, including a scale platform to grow in Asia-Pacific and EMEA (Europe, Mideast and Africa).”
Sherwin-Williams says it intends to finance the transaction through a combination of cash on hand, liquidity available under existing facilities and new debt. Sherwin-Williams has obtained committed bridge financing from Citi, which also acted as the lead financial advisor to Sherwin-Williams. J.P. Morgan Securities also acted as financial advisor to Sherwin. Goldman Sachs and BofA Merrill Lynch are acting as financial advisors to Valspar.
By Robert Westervelt
Source: Chemical Week
France has launched an offshore green hydrogen production platform at the country’s Port of Saint-Nazaire this week, along with its first offshore wind farm. The hydrogen plant, which its operators say is the world’s first facility of its type, coincides with the launch of another “first of its kind” facility in Sweden dedicated to storing hydrogen in an underground lined rock cavern (LRC).
The project sets up the Hydrogen Valley in Rome, the first industrial-scale technological hub for the development of the national supply chain for the production, transport, storage and use of hydrogen for the decarbonization of industrial processes and for sustainable mobility.
At first glance, hydrogen seems to be the perfect solution to our energy needs. It doesn’t produce any carbon dioxide when used. It can store energy for long periods of time. It doesn’t leave behind hazardous waste materials, like nuclear does. And it doesn’t require large swathes of land to be flooded, like hydroelectricity. Seems too good to be true. So…what’s the catch?