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Here’s What To Do About Sherwin-Williams Co (SHW)’s Acquisition of The Valspar Corp (VAL)

Sherwin-Williams Co (NYSE:SHW) is the leader in the North American coatings (paint) industry. The company is the 3rd largest coatings corporation globally.

SHW Global Market Share
Source:  Source: Sherwin-Williams Credit Suisse Presentation, slide 5

The company is not an overnight success.  Sherwin-Williams was founded in 1866.

Sherwin-Williams’ management has a long history of rewarding shareholders with rising dividend payments. The company has paid increasing dividends for 37 consecutive years. This makes Sherwin-Williams 1 of only 50 Dividend Aristocrats.

Among the investors tracked by Insider Monkey, Shervin-Williams registered a slight decrease in popularity during the fourth quarter and 43 funds reported long positions in the company, versus 45 funds a quarter earlier. However, the total value of their holdings increased to $1.91 billion from $1.61 billion and represented 7.90% of the company’s outstanding stock at the end of 2015. The largest shareholder of Shervin-Williams in the Insider Monkey database is Eric Mindich’s Eton Park Capital, which owns some 1.12 million shares. In addition, Eton Park owns 1.20 million shares in ‘Call’ options.

The company’s stock currently has a 1.2% dividend yield.  Despite its long corporate history Sherwin-Williams is still in growth mode.

This growth is reflected in the rise of Sherwin-Williams stock price over the last several years:

SHW GrowthSource:  Finviz

The company is realizing growth by consolidating the fragmented coatings industry.

Sherwin-Williams took a big step forward in consolidating the industry with its latest announcement…

Sherwin-Williams is Acquiring Valspar

Sherwin-Williams Co (NYSE:SHW) announced it will acquire The Valspar Corp (NYSE:VAL) on March 20th.  Sherwin-Williams will acquire Valspar for $11.3 billion (including Valspar’s debt).

The image below compares the size (using enterprise value) of Valspar and Sherwin-Williams.  Enterprise value for both businesses is post acquisition announcement.  This shows the impact the acquisition will have on Sherwin-Williams’ business.

SHW VAL Size

The acquisition of Valspar by Sherwin-Williams is more than a small ‘bolt on’ deal.  The acquisition will significantly bolster Sherwin-Williams international operations and boost the company to become the largest coatings business in the world.

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