The Sherwin-Williams Company
) announced that it has entered into an agreement to buy Mexico's
leading paint company Consorcio Comex S.A. de C.V. for
approximately $2.34 billion, including debt. The transaction is
expected to close after the completion of all the necessary
The acquisition will be a strategic and cultural fit for both
Sherwin-Williams and Comex Group. With the acquisition of Comex,
Sherwin-Williams will be able to expand its presence in those
markets, where its store count is low. Further, the company will
be able to expand its architectural paint business in America.
Consorcio Comex sells paints and coatings under several brands in
the United States and Canada. The company also sells
architectural and industrial coatings in Mexico. It not only has
company-operated stores but also works with independent paint
dealers. The company is based in Mexico and had annual sales of
$1.4 billion in 2011.
Sherwin-Williams is a global leader in the manufacture,
development, distribution, and sale of coatings and related
products to professional, industrial, commercial, and retail
customers. Last month, the company released its third-quarter
The company's adjusted earnings of $2.29 per share surpassed the
Zacks Consensus Estimate of $2.19. The adjusted earnings exclude
a negative currency translation impact of 5 cents a share.
Including that impact, earnings came in at $2.24 per share in the
reported quarter compared with $1.71 a year ago.
Net sales for the quarter increased 4.8% year over year to
$2.60 billion, but missed the Zacks Consensus Estimate of $2.67
billion. The growth was driven by an increase in paint sales
volume and selling price, partially offset by the negative
impacts of currency translation.
Sherwin-Williams' philosophy is to diversify its customer base
and expand its operations into various geographies. The company
follows a strategy of growing through acquisitions and internal
initiatives, such as efficient working capital management and
innovation. This policy enables the company to somewhat reduce
its dependency upon prevailing market conditions.
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However, Sherwin-Williams is facing higher costs for raw
materials, including titanium dioxide in the Consumer group
segment, which primarily sells paints to the company's Paint
Stores Group segment.
Sherwin-Williams competes with companies like
E. I. du Pont de Nemours and Company
PPG Industries Inc.
). The company retains a Zacks #2 Rank, which translates into a
short term rating of Buy and we have a long-term Neutral
recommendation on the stock.