The $90 million deal comes with 314 company-operated paint stores and eight manufacturing sites in the U.S. and Canada
CLEVELAND, Ohio -- Sherwin-Williams Co., still hopeful about winning over Mexican regulators, said this morning that it had bought the U.S. and Canadian divisions of Mexican paint company Consorcio Comex, S.A. de C.V.
It's not quite the announcement Sherwin-Williams had hoped to make -- that it had bought the much-larger Mexican division of Comex, which sells paint via 3,300 stores operated by 750 concessionaires. But it signals that the Cleveland paint company is moving closer to buying the rest of Comex.
"This is an exciting step forward in our ongoing effort to bring these two respected companies together," Sherwin-Williams Chairman and CEO Chris Connor said in a statement. "The Comex business model in the U.S. and Canada is a good strategic fit for Sherwin-Williams and will improve our ability to serve customers in some of our most important geographic markets."
Sherwin-Williams will get 314 company-operated stores in the transaction -- 234 stores in the U.S. and 80 stores in Canada -- as well as five manufacturing sites in the U.S. and three in Canada.
Comex also supplies paint and coatings products to about 1,500 independent paint dealers in Canada.
Comex manufactures and sells architectural paints and coatings under brand names that include Frazee, Kwal, Parker Paints, General Paints, Color Wheel and Para.
Sherwin-Williams will pay $90 million in cash and assume Comex's liabilities, currently valued at about $75 million.
Sherwin-Williams and Comex had been moving toward the $2.34 billion transaction, which had already been approved by U.S. and Canadian authorities, when Sherwin-Williams abruptly told investors on July 18 that the Federal Competition Commission of Mexico had rejected the plans by a 3-2 vote.
The commission, called Cofeco, issued a 144-page decision expressing concerns about the U.S. company buying up Mexico's largest paint retailer in terms of stores and market share and edging out smaller competitors.
Despite assurances by Chris Connor that both he and Comex CEO Marcos Achar were "aggressively" reaching out to regulators and would "pursue all avenues available to secure confirmation of this transaction," investors were rattled.
Sherwin-Williams' shares fell nearly $20 per share that day before closing at $167.94, down 8 percent, or $15.25 from the previous day.
Today, the company said it remains confident about buying the rest of Comex.
"Sherwin-Williams and Comex remain fully committed to securing regulatory approval from the Federal Competition Commission of Mexico for Sherwin-Williams to complete the acquisition of the operations of Comex in Mexico," the company said in a statement. To that end, it extended the exclusivity period of its Stock Purchase Agreement to March 31, 2014.
Sherwin-Williams said it would provide additional information during its third-quarter earnings call at 11 a.m. Friday, Oct. 25.
Shares were up 2 percent, or $3.68, to $178.60 today in late-morning trading. They closed at $177.50, up $2.58 from Friday's close.
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