Sherwin-Williams to Double in
Latin America via Comex
The $2.34 billion
acquisition of
Mexico’s Comex
is Sherwin-
Williams’ largest
deal to date.
by Charles W. Thurston
Latin America Correspondent
thurstoncw@rodpub.com
Sherwin-Williams’ largest deal ever, the $2.34 billion acquisition of Mexico’s Comex, will strategically position the
buyer in a set of robust national markets
throughout Latin America, at the same time as
it strengthens its western U.S. and Canadian
presence. The combined company will have $10
billion in sales.
With very strong brand recognition in Latin
America, S-W now has acquired a company
that registered two-thirds of its sales in the
region, including Mexico. Comex, which had
total sales of $1.6 billion in 2010, had 3,300
points of sale when the deal was announced.
S-W has 3,400 points of sale in the U.S., according to one analyst.
Mexico’s residential paint market is expected to expand by double digits over the coming
year. A recent survey of Mexico’s leading consumer companies indicated a shared expectation for approximately 20 percent growth over
the coming year.
Comex has increased its investments in the
U.S. over the past several years through the acquisition of Professional Paint Inc., of Lonetree,
Colorado for $400 million. PPI’s network of
regional paint formulators sell under different brands in the U.S. including Color Wheel
in Florida, Frazee in California, Kwal Paint
in Colorado, Parker Paint in the U.S. Pacific
Northwest and General Paint in Canada. As a
result, Comex has expanded rapidly in China
as well.
Following the announcement of the Comex
deal, Moody’s Ratings Service announced a
downgrade review of the company’s A3 Senior
Unsecured Rating, since some $2 billion of the
purchase price would go to cover Comex debt.
As recently as August, Comex took out a loan
of more than $400 million, and in 2009, the
company executed a $475 million restructuring. To raise the acquisition funds, S-W indicated plans to issue 5, 10 and 30 year notes.
In January, Moody’s Ratings Service noted
that, “SHW’s ratings are constrained by the
company’s relatively narrow focus in the
coatings sector. The company is also heavily
exposed to the housing market, as trends in
housing have an important impact on demand.
While we believe the company’s manufacturing
efficiency is world-class, the company has sig-
nificant exposure to rising input costs, notably
most recently titanium dioxide.”
While only some 15 percent of Comex sales
are industrial, the company’s close linkage with
Mexico’s national oil company Pemex will pro-
vide S-W with a competitive edge in this high-
value segment, as well. The combined entity
will have incumbent access to the oil and gas
market, as well as to a growing industrial main-
tenance segment in general. In May, Comex un-
veiled a new powdered coating line, Khral.
Comex has strong brand recognition in Latin America.
Within Comex, one industrial unit offers:
industrial coatings; architectural paints; tex-turizing; accessories; enamels; waterproofing;
wood and other products. “We manage specification coating products for PEMEX, CFE (the
national electricity monopoly), Amercoat, CIC
(Comex Industrial Coatings), industrial floor
coatings, flame retardant coatings, high temperature coatings, primers, anticorrosive polyurethane and epoxy coatings among others,” the
unit advertises.
Mexico’s national paint trade association,
ANAFAYT, blessed the Comex deal. President
Javier Guillermo Maldonado Moctezuma
noted that Mexico only consumes 5. 5 liters of
paint per capita annually, while the U.S. consumes close to 16 liters. CW
