Valspar Corp. will sell the assets of its industrial wood-coatings business to satisfy U.S. regulators' antitrust concerns on its acquisition by Sherwin-Williams.
Valspar to sell industrial wood-coatings assets for $420 million
The antitrust objections to the Sherwin-Williams deal should cease once the sale is completed.
April 13, 2017 at 12:25AM
Valspar and Sherwin-Williams said Wednesday the unit will be sold to Philadelphia-based Axalta Coatings Systems for $420 million in cash. The Valspar wood-coatings business, with $225 million in annual revenue, is considered one of the leading providers of coatings for both original equipment manufacturers and aftermarket applications.
"Axalta is a strong cultural fit with Valspar and shares our commitment to innovation and customer service," said Valspar CEO Gary Hendrickson in a statement. "We will work closely with Axalta to ensure a smooth transition of this business."
Sherwin-Williams announced a year ago its plans to buy Valspar for $11.3 billion, subject to approval by the Federal Trade Commission and Canadian Competition Bureau. In the months that followed, regulators made it clear that the deal would face antitrust obstacles and some type of division or asset divestiture would be needed.
"With this [Axalta] agreement, we believe that we have addressed regulatory concerns appropriately and we are moving forward to obtain approval for our acquisition of Valspar," said Sherwin-Williams CEO John Morikis in a statement.
The Axalta deal also is subject to regulatory approval. If it goes through as expected, the Sherwin-Williams-Valspar deal could close by its expected date of June 17.
Once sold, Sherwin-Williams is expected to move Valspar's headquarters operations to Cleveland where it is based. Valspar has about 10,500 employees worldwide, including about 600 in Minneapolis. It is unclear what will happen with Valspar's research-and-development center at the Minneapolis complex.
Axalta, which reached its 150th year in business in 2016, also is a multinational company with 46 manufacturing sites and 13,000 employees.
The Axalta deal announcement did not much move the needle on the companies' stock. Valspar closed Wednesday up 1 percent at $112.45 a share. Sherwin-Williams closed at $312.96, up less than 1 percent.
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