Strategic buyers are pursuing targets in the fairly fragmented chemicals sector that will expand both their geographic and product reach. Axalta, Maroon Group and Sherwin-Williams are buying companies that will help them grow in subsectors, such as food ingredients, while escalating their global presence. Century Industrial Coatings, Lincoln Fine Ingredients and Valspar are among recent targets.
Axalta Coating Systems Ltd. (NYSE: AXTA) is not done making deals after acquiring Century Industrial Coatings for undisclosed terms. Jacksonville, Texas-based Century makes water-based primers and polyurethane coatings for steel, rail cars and the oil and gas industries. Axalta manufactures liquid and powder coatings for the transportation and industrials sectors.
Axalta CEO Charlie Shaver says the company will seek targets that have between $25 million and $100 million in revenue across those same industries. “Filling out the industrial product line is important for us, as well as to continue to complement our global market presence in refinish,” Shaver told analysts. In a 2016 acquisition that expanded its international growth, Philadelphia-based Axalta purchased Geeraets Autolak for an undisclosed amount. Geeraets, located in Druten, Netherlands, produces coatings, sealants and sprays. The target is a distributor of Axalta’s Cromax brand in the Netherlands. Cromax makes basecoat color coatings and sealants that are mostly used in automotive and industrial manufacturing.
Additives supplier Maroon Group LLC of Avon, Ohio, bought Lincoln Fine Ingredients for undisclosed terms. LFI, founded in 1976 and located in Lincoln, Rhode Island, distributes alcohol, amino acids, oils and sweeteners. The company works with the consumer, food and beverage and pharmaceutical sectors. In another related deal announced in 2016, Cleveland-based paint retailer Sherwin-Williams Co. (NYSE: SHW) agreed to buy rival Valspar Corp, (NYSE: VAL) for about $9.3 billion to give the company additional global scale. Valspar of Minneapolis, makes coatings for the food and beverage and packaging sectors. Chemicals M&A is poised to remain robust as companies continue to seek new growth channels.