8-KOther Events

SHERWIN WILLIAMS CO 8-K Report, Corporate Update (Apr 12, 2017)

Filed April 12, 2017For Securities:SHW

Summary

This 8-K filing from Sherwin-Williams Company (SHW), dated April 12, 2017, provides a critical update on its previously announced merger with The Valspar Corporation. The company has entered into a definitive Asset Purchase Agreement with Axalta Coating Systems Ltd. to divest Valspar's North American industrial wood coatings business for approximately $420 million in cash. This divestiture is a key step to satisfy regulatory approval requirements, specifically from the Federal Trade Commission, needed to complete the larger merger with Valspar. The divestiture is structured such that Valspar's relevant business generated less than $650 million in 2015 revenues, which supports the expectation that the merger will proceed at the previously agreed-upon price of $113 per share. Sherwin-Williams anticipates closing this divestiture before the end of the second quarter of 2017, and subsequently completing the merger with Valspar around the same timeframe, subject to customary closing conditions, including antitrust approvals.

Key Highlights

  • 1Sherwin-Williams to divest Valspar's North American industrial wood coatings business to Axalta Coating Systems Ltd.
  • 2Divestiture price is approximately $420 million in cash.
  • 3The divestiture is a condition to obtain regulatory approval for the Sherwin-Williams merger with Valspar.
  • 4The divested business represents annual revenues below Valspar's $650 million threshold (2015 figures), facilitating the merger continuation.
  • 5Merger with Valspar expected to proceed at the previously announced $113 per share price.
  • 6Divestiture expected to close before the end of Q2 2017.
  • 7Merger completion is also expected before the end of Q2 2017, subject to customary conditions and approvals.

Frequently Asked Questions

The main purpose of this filing is to announce Sherwin-Williams' agreement to divest Valspar's North American industrial wood coatings business to Axalta Coating Systems for $420 million. This is a crucial step towards obtaining regulatory approval for Sherwin-Williams' larger merger with Valspar.

This divestiture is a requirement by the Federal Trade Commission to approve the merger. By selling off a specific segment of Valspar's business, Sherwin-Williams aims to satisfy antitrust concerns, allowing the merger to proceed. The sale also ensures the merger is expected to close at the original price of $113 per share.

Sherwin-Williams expects to close the divestiture of the wood coatings business before the end of the second quarter of 2017. Following this, the company anticipates completing the merger with Valspar around the same timeframe, provided all customary closing conditions and necessary approvals are met.

The divestiture will bring in approximately $420 million in cash. While this reduces the overall scale of the combined entity by shedding a portion of Valspar's operations, it's a necessary step to realize the strategic benefits of acquiring the core Valspar business at the agreed-upon price and terms.