The combination also will catapult Cleveland-based Sherwin-Williams from the world’s third-largest paint company to first, surpassing industry leader PPG Industries Inc. and Akzo Nobel NV, Morikis said. The stock was down 73 cents, or 5 percent, to $13.87.
Advertisement
HOUSING SLUMP: Homebuilders fell broadly following a report indicating that sales of previously occupied USA homes sank 7.1 percent last month.
Under the terms of the offer, Sherwin-Williams would acquire Valspar in a transaction valued at approximately $11.3 billion. Shares were Reiterated by RBC Capital Mkts on Jan 29, 2016 to “Outperform” and Lowered the Price Target to $ 315 from a previous price target of $327. Goldman Sachs raised shares of Sherwin-Williams from a “neutral” rating to a “buy” rating in a report on Wednesday, January 20th. Three analysts have rated the stock with a hold rating and twelve have given a buy rating to the company.
Sherwin-Williams and Valspar have entered into a definitive agreement under which Sherwin-Williams will acquire Valspar for $11.3 billion, including the assumption of $2 billion of debt.
At its start, the company that would become Valspar was just a one-man operation when Samuel Tuck opened a paint dealership in Boston in 1806. The stock has a market capitalization of $26.49 billion and a price-to-earnings ratio of 25.86. The stock’s 50 day moving average is $266.39 and its 200 day moving average is $257.21. The company had revenue of $2604.60 million for the quarter, compared to analysts expectations of $2592.41 million. During the same quarter past year, the business earned $1.37 EPS.
Sherwin-Williams, which gets 84 percent of sales in the US, gains a company that generates nearly half of its revenue overseas while also adding coatings for coils and packaging. This shows the impact the acquisition will have on Sherwin-Williams’ business. February durable goods orders from the Commerce Department arrive on Thursday.
Sherwin-Williams’ management has a long history of rewarding shareholders with rising dividend payments. This represents a $3.36 dividend on an annualized basis and a yield of 1.16%.
A number of hedge funds have made changes to their positions in SHW.
Citibank acted as the lead financial adviser to Sherwin-Williams, and J.P. Morgan Securities LLC also acted as financial advisor.
Sherwin-Williams has obtained committed bridge financing from Citigroup Global Markets Inc.in support of the transaction and is committed to maintaining its current dividend and rapid deleveraging using significant free cash flow.
According to Zacks Investment Research, “Sherwin-Williams Co.is a manufacturer, distributor and retailer of paint, coatings and related products”. While consumers might buy Valspar’s Cabot stain products or its paint lines at Target, Lowe’s, Home Depot or Ace Hardware stores, its products have covered everything from Coca-Cola cans to Yamaha grand pianos to aviation pioneer Charles Lindbergh’s Spirit of St. Louis to naval submarines.
Advertisement
SHW sells paints, coatings and related products through company operated stores, large retail stores, independent retail stores (primarily hardware) and directly to customers (private label paints and industrial coatings).
