PPG Industries Inc.
) has wrapped up the acquisition of the North American
architectural coatings business of Dutch paints company
) for $1.05 billion. This marked the second-largest acquisition
in the Pittsburgh, Pa.-based company's history.
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Under the deal, PPG Industries acquired all the North American
architectural coatings manufacturing and distribution facilities,
paint stores and product lines of AkzoNobel. The acquisition also
includes all the employees who are engaged in the production,
sale and distribution of architectural coatings in the U.S.,
Canada and the Caribbean.
The North American coatings business, which markets the Glidden
paint brand in the U.S., added around 600 AkzoNobel-owned paint
stores to PPG Industries' portfolio. With the closure of the
acquisition, PPG Industries' products are now available in over
15,000 outlets in North America.
The acquisition expanded PPG Industries' branded paint product
offerings and scale in the North American architectural paint
market, which is expected to benefit from a recovery in the
construction market. PPG Industries expects to achieve net
operating earnings of about $160 million for the acquired
business over a three-year period.
PPG Industries has a diversified business, both in terms of
products offered and geographical presence. It has a leading
position in several paints and coatings end markets. The company
looks to grow its businesses strategically along with controlling
PPG Industries is also taking steps to grow its business
inorganically by making a number of acquisitions. Moreover, it is
pursuing restructuring of its European operation, which is
expected to fetch meaningful cost savings this year.
However, the European market is expected to remain under pressure
and raw material inflation and currency headwinds remain concerns
for the company.
PPG Industries currently holds a short-term Zacks Rank #3 (hold).
Other companies in the chemical industry worth considering are
LyondellBasell Industries NV
) with both holding a Zacks Rank #2 (Buy).