Axalta Coating Systems (NYSE: AXTA) has made an agreement with The Valspar Corp. (NYSE: VAL) and The Sherwin-Williams Co. (NYSE: SHW) to acquire Valspar’s North American industrial wood coatings business. The deal, valued at approximately $420 million in cash, comes in connection with the reviews by the Federal Trade Commission and Canadian Competition Bureau regarding Sherwin-Williams’ proposed acquisition of Valspar.
Valspar’s North American industrial wood coatings business, currently known as Valspar Wood, is a provider of coatings for the original equipment manufacturer (OEM) and aftermarket industrial wood industries. The target’s coatings are used on building products, cabinets, flooring and furniture materials in North America. The business generated $225 million in revenue in 2016, and operates using a variety of brand names, including: Zenith, Lustre Lac and Graintone.
“This is an outstanding opportunity for Axalta to enter the large industrial wood coatings market,” states Axalta CEO Charlie Shaver. “This acquisition continues to build on our strategy to strengthen and further diversify our Performance Coatings segment.”
Axalta, headquartered in Philadelphia, is also a global provider of coatings materials. The buyer’s products are used on light OEM vehicles, commercial vehicles, and refinish applications to electric motors, pipelines and buildings. In March 2017, Axalta coated the Ashgabat International Airport in Central Asia. The buyer plans to operate Valspar’s North American business as a tuck-in acquisition. As part of the deal, Axalta will acquire the personnel, the dedicated manufacturing sites, the research and development assets, and the underlying intellectual property of the business.
Coating companies continue to attract buyer interest. TA Associates backed coatings supplier Ideal Cures Private Limited; Axalta Coating Systems Ltd. (NYSE: AXTA) has purchased Netherlands distributor Geeraets Autolak; Audax Private Equity-backed Innovative Chemical Products (ICP) bought adhesives maker Fomo Products Inc.; and PPG (NYSE: PPG) is acquiring MetoKote Corp.
The current transaction is subject to the closing of the Valspar and Sherwin-Williams merger. Centerview Partners LLC is acting as financial adviser to Axalta, and Morrison & Foerster LLP is serving as legal counsel. Deutsche Bank AG is providing financing to Axalta. Jones Day is acting as legal counsel to Sherwin-Williams.