by Charles W. Thurston
Latin America Correspondent
thurstoncw@rodmanmedia.com
Business columns in Mexico’s press were quick to report in early March, following a visit by Sherwin-Williams
officials, that the company was prepared to
meet the terms of anti-trust regulators there
to consummate its purchase of paint and
coatings market leader Grupo Comex. Those
terms primarily revolved around S-W’s sale
of its architectural unit in Mexico to a third
party, sources suggested, leaving the question
of “To Whom?”
Among the competitors in the Mexican
architectural segment, a host were named in
the 331-page decision against the purchase
in October 2013 by the Comisión Federal
de Competencia Económica (CFCE)s, now
headed by Alejandra Palacios. Among the
Mexican competitors mentioned were: Berel;
Sayer Lack; Osel; Prisa; Acuario, Optimus,
Mapla and Casther. Favorites among these,
according to news analysts at El Imparcial
and other publications, include Berel, Sayer
Lack and Osel. Multinational Axalta was
also mentioned as a forerunner in the up-
coming S-W sell off.
S-W Mexico, under the leadership of president Pablo García Casas, added 39 stores
to its network last year, contributing to the
company’s 587 dealer stores across the Latin
American region. In comparison, the Comex
Group touts a dealer distribution network of
3,300 stores plus 775 concessions in Mexico.
Berel, which according to the CFCE detains
the next largest paint and coatings distribution system in the country, has a network of
about 1,000 stores.
Pinturas Berel, which operates a production
facility at Santa Catarina, near Monterrey, in
Nuevo Leon state, markets its Berelex Green
acrylic interior paint as a VOC-free product.
The company also markets enamels under the
BioMetal brand, waterproofing coatings under
the Kover brand, and Summa varnishes, among
other products.
This disparity in market distribution was
a key objection by the CFCE, which at one
point noted, “The market entrance of Behr
(exclusively through Home Depot distribution) is indicative that the genie in the bottle
is clearly the network of distribution, which
could be turned into a barrier.” Behr reportedly exports 70,000 gallons of paint per month
from the United States to Mexico for Home
Depot sale. While the CFCE accepts domestic census data suggesting that there are just
over 12,000 paint stores in Mexico, it points
out that there are “potentially 60,000 points
of sale,” should a powerful contender seek to
build out a network.
The CFCE also made a particular point of
Grupo Comex’s idle capacity as a market advantage for S-W, should it consummate the
purchase. Comex is market leader in the automotive, maritime and industrial segments, in
addition to the architectural segment. While
there is a total of some 377 paint and coatings manufacturers in the country, according
to the CFCE document, a well-funded buyer of the Grupo Comex production system
could rapidly displace many of the existing
competitors in the market.
In September 2013, a stock purchase
agreement between S-W and Comex was
amended to extend the date, by which the
agreement could be terminated by either
party, to March 31, 2014. At the same time,
the offer was amended to a purchase price
of approximately $2.25 billion, S-W documents indicate. CW
Sherwin-Willliams
Mexico added
39 stores to its
network last year,
contributing to
the company’s
587 dealers
across the Latin
America region...
in comparison the
Comex Group
touts a dealer
distribution
network of 2,300
stores.
Mexican Distribution: S-W’s Stumbling Block
