by Charles W. Thurston
Latin America Correspondent
thurstoncw@rodmanmedia.com
Sherwin-Williams(S-W)executiveshave said they plan to head south to meet with the new members of Mexico’s
anti-monopoly agency, Comisión Federal
de Competencia Económica (CFCE), in an
effort to come up with a winning solution
for their twice-rejected initial proposal to
acquire the Mexican operations of Comex
Group. While the regulators oppose the deal
on the basis of potential unfair competition,
Mexico’s paint manufacturers have embraced the deal for the boost it would provide for the industry’s global ambitions.
In September, S-W, completed the purchase of the U.S. and Canadian businesses
of Comex for $90 million in cash and assumed debt of some $75 million, out of a
total offer of about $2.3 billion. Still, the
Mexican manufacturing and distribution
capabilities of Comex are the prize target.
Alejandra Palacios Prieto is the new head
of the CFCE, following work at the federal
telecommunications regulatory agency and
as a director of governance projects at the
Instituto Mexicano para la Competitividad
(IMCO), an independent think tank on
domestic and international competitiveness. Her new colleagues at CFCE are
well-heeled academics and professionals
with international credentials that include
degrees from such institutions as Stanford,
the University of Chicago, Texas A&M and
the University of Warwick.
Palacios has said the CFCE is open to a
modified deal. While S-W engages her and
the rest of the new team, the Mexican paint
manufacturers association has gone to bat
for the merger. Javier Guillermo Maldonado
Moctezuma, the president of the Asociacion
Nacional de Fabricantes de Pinturas y Tintas
(Anafapyt), has held several interviews sup-
porting the deal, following the two CFCE
decisions – the first made by the old mem-
bers of the agency, followed by unanimous
ratification of that decision by the new mem-
bers. He said that while the merger would
present no economic or labor problems for
the industry, it should benefit many small-
and medium-sized paint manufacturers in
terms of technology acquisition.
The CFCE basis for ruling against
the deal is that consumers might suf-
fer from less choice and higher prices.
But Maldonado has pointed out that
although Comex is already the leading
paint company in the country, over 300
other manufacturers in the country con-
tinue to do business, since there are var-
ied paint quality levels offered and sought
in the various segments of the market.
Maldonado further points out that the
industry suffers from high-cost raw ma-
terial imbalances, which the S-W/Comex
merger might alleviate in part.
Beyond the domestic competition is-
sue, Maldonado was quoted saying “98
percent” of the Anafapyt membership sees
the S-W/Comex deal as an opportunity for
Mexico’s expansion in the global market.
Comex is not only the largest paint distrib-
uter in Mexico, but also in Central America;
the company has an international distribu-
tion chain that reaches as far as China.
Increased Mexican paint sales to the
United States, to Europe and beyond have
been a dream of the industry for years,
following the formation of the North
American Free Trade Agreement in 1994
and the Mexico-EU Free Trade Agreement
in 1997. Given Mexico’s proven ability
to compete with Chinese manufacturing,
Sherwin-Williams’ investment could help
rekindle growth of the Latin American
paint market. CW
Focusing on the Upside
of Sherwin-Williams/Comex
Charts courtesy of IRL.
