It looks like the giant paint-company merger of the century will require some sort of divestiture after all, before it goes through.
Sherwin-Williams announced Thursday in its earnings announcement that before it closes on the purchase of Minneapolis-based Valspar Corp. for $11.3 billion, it must sell something with revenue below $650 million.
"We expect to negotiate the divestiture and complete the Valspar transaction at $113 per common share within 90 days," it said.
Since announcing merger plans in March, officials from Valspar and Ohio-based Sherwin-Williams Co. have often said they didn't expect the Federal Trade Commission to mandate the sale of divisions in order to win regulatory approval for the acquisition.
However, FTC officials in the fall requested several rounds of additional information about the operations of both paint manufacturers.
"We now expect a divestiture will be required to gain approval from the FTC to complete the acquisition of Valspar," Sherwin Williams wrote in a statement Thursday. "We are moving forward on a divestiture that we believe will allow us to gain approval from the FTC."
Officials also said that while Valspar shareholders approved the deal in June, both companies have been waiting for final approval from regulators in order to proceed. Now there is movement.
Valspar's stock price jumped $2.43 to $110.74 per share in trading Thursday. Sherwin-Williams' stock jumped $21.58 to $305.
