Sherwin-Williams ( SHW ) has terminated its amended and restated stock purchase deal to buy the Mexico business of Consorcio Comex, S.A. de C.V. The U.S. paint giant said that it has sent a notice to the sellers regarding the termination.
Under the terms of the restated agreement dated Sep 16, 2013, either Sherwin-Williams or Comex had the right to end the deal if it did not consummate on or before Mar 31, 2014.
According to Sherwin-Williams, Comex has accused it for breaching its obligations under the stock purchase agreement by not using commercially reasonable efforts to close the deal. Sherwin-Williams, on Apr 3, filed a complaint in the New York Supreme Court, requesting the court to declare that it has not breached the agreement. The company will comment further on the matter in its first-quarter 2014 earnings call on Apr 17.
Sherwin-Williams' shares fell 3.3% to close at $193.89 last Friday.
Sherwin-Williams, in Nov 2012, agreed to buy Comex for roughly $2.34 billion, including debt. The company, in Sep 2013, completed the acquisition of the U.S. and Canadian businesses of Comex for $90 million in cash and assumed liability of around $75 million.
However, Sherwin-Williams' appeal related to the pending acquisition of Comex's core Mexican business was denied and the acquisition was declared unauthorized by the Federal Economic Competition Commission (FECC) in Mexico in Nov 2013.
Sherwin-Williams, last month, met with the FECC in Mexico to discuss the remedies required by the commission as a condition of regulatory approval related to the acquisition of Comex's business in Mexico.
The acquisition of Comex's U.S. and Canadian businesses has ushered in significant opportunity for Sherwin-Williams. The acquisition is a strategic fit for the company and will enable it to better serve its customers across some of its key markets.
Sherwin-Williams, which is one of the leading paints companies along with PPG Industries Inc. ( PPG ), currently holds a Zacks Rank #4 (Sell).
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