LONDON, UK / ACCESSWIRE / April 13, 2017 / Active Wall St. blog coverage looks at the headline from The Valspar Corp. (NYSE: VAL) and Axalta Coating Systems Ltd (NYSE: AXTA). Valspar and The Sherwin-Williams Company (NYSE: SHW) on April 12, 2017 jointly announced the sale of Valspar's North American Industrial Wood Coatings business (Valspar Wood Coatings) to Axalta Coating Systems. As per the asset sale agreement between these Companies, Axalta will pay $420 million in cash for Valspar Wood Coatings business. Register with us now for your free membership and blog access at:

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Valspar and Sherwin-Williams are divesting Valspar Wood Coatings Business to get approvals from US FTC (Federal Trade Commission) and Canadian Competition Bureau (CCB) for the Valspar and Sherwin-Williams merger.

Commenting on the asset sale agreement with Axalta, Gary E. Hendrickson, Chairman, and CEO of Valspar said:

"We believe that Axalta is an excellent buyer for our North American Industrial Wood Coatings business and will provide great opportunities for our talented employees."

John G. Morikis, Chairman, President and CEO of Sherwin-Williams, added:

"With this agreement, we believe that we have addressed regulatory concerns appropriately and we are moving forward to obtain approval for our acquisition of Valspar."

Terms of the asset sale agreement

Philadelphia, Pennsylvania based Axalta was formerly known as DuPont Performance Coatings until it was acquired by The Carlyle Group in 2013. It is one of the world's largest providers of coatings to the transportation and industrial sector.

As per the asset sale agreement, Axalta will acquire the entire assets and business of Valspar Wood Coatings unit including manufacturing sites, R&D assets, and any related intellectual property. Axalta will also integrate the employees of Valspar Wood Coatings unit into its own business. Valspar Wood Coatings unit develops, produces, and sells wood coatings under the Zenith, Lustre Lac, and Graintone brands for lumber suppliers and cabinet, flooring and furniture makers in the US and Canada. The business recorded total sales of approximately $225 million in 2016. For Axalta this is a bolt-on acquisition. Axalta has made arrangements to get financing from Deutsche Bank AG New York branch for this deal.

The Axalta/Valspar Wood Coatings deal is subject to the closing of the Valspar and Sherwin-Williams merger, getting approval of US FTC and CCB as well as other closing conditions.

Commenting on the acquisition, Charlie Shaver, Chairman and CEO of Axalta said:

"Our shared commitment to technology and excellence in application services, as well as a strong pipeline of new products, will enable us to meet the needs of both current and new customers. This acquisition continues to build on our strategy to strengthen and further diversify our Performance Coatings segment."

The Background

In March 2016, Sherwin-Williams had announced the acquisition of Valspar in an all-cash transaction. Sherwin-Williams agreed to pay $113 in cash for each share of Valspar and the deal had an enterprise value of approximately $11.3 billion. The deal was expected to close in Q1 2017.

In May 2016, the US FTC requested for additional information and documents with regards to the proposed Valspar and Sherwin-Williams merger. This was a second request from FTC and was in-line with the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

On March 21, 2017, Valspar and Sherwin-Williams announced the extension of their merger agreement and moved the termination date to June 21, 2017. In January 2017, when Sherwin-Williams has announced their FY16 year-end earnings report, the Company had hinted that they would have to make some divestures to gain approval of US FTC. As per the Valspar and Sherwin-Williams merger agreement, the divestment should be below $650 million. In order to complete the divesture more time was needed and hence the termination date of the Valspar and Sherwin-Williams merger agreement was extended to June 21, 2017. By this time, Sherwin-Williams would have enough time to complete the acquisition of Valspar.

Stock Performance

On Wednesday, April 12, 2017, the stock closed the trading session at $112.45, climbing 1.00% from its previous closing price of $111.34. A total volume of 7.02 million shares have exchanged hands, which was higher than the 3-month average volume of 499.99 thousand shares. Valspar's stock price advanced 5.95% in the last three months, 7.29% in the past six months, and 6.47% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 8.89%. The Company's shares are trading at a PE ratio of 26.74 and have a dividend yield of 1.32%. At Wednesday's closing price, the stock's net capitalization stands at $8.93 billion.

Axalta Coating Systems' share price finished yesterday's trading session at $31.29, falling 1.17%. A total volume of 1.44 million shares exchanged hands. The stock has surged 12.11% and 19.66% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the Company have gained 15.04%. The stock currently has a market cap of $7.61 billion.

Sherwin-Williams shares closed at $312.96 with a marginal rise of 0.18%. Approximately 498.43 thousand shares were traded during the day. The stock has increased by 0.91% in the last 30 days and by 10.59% in the last 90 days. The overall performance of the share for the last 12 months was 6.58% with its year-to-date performance at 16.77%. The share is trading at a PE ratio of 26.16 and has a dividend yield of 1.09%. Its market capital stood at $28.91 billion.

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