For 2005, a large transaction was medium in size. Medium-sized transactions included the acquisition of Samuel Cabot by Valspar and the sale of Iowa Paint to PPG. Samuel Cabot was an "old-time" familyowned paint business. This acquisition strengthened Valspar's product lines and will enable Valspar to expand the number of sku's it sells to its trade sale paint customers.† The acquisition of Iowa Paint by PPG expanded PPG's ability to service professional paint contractors in the Midwest and includes Iowa Paint's 42 locations within eight Midwestern states.
RPM continued its consistent record of growth by acquisition through two coatings transactions in 2005. RPM's Carboline subsidiary acquired AD Fire Protection Systems, with sales around $16 million, in June. AD Fire is a leading manufacturer of architectural fireproofing materials, including water-based intumescent coatings and heavy weight cementitious fireproofing. The product lines complement Carboline's for the commercial fireproofing market with its offerings for applications in industrial markets. In July, RPM's Zinsser division acquired OKON from Rentech. OKON's technology for water-based sealing coatings for concrete, masonry and wood was attractive to RPM.† Joe Lee, director of corporate development has stated that there is "reasonable activity, yet some of the pricing appears to be unreasonably high."
Another technology transaction was the acquisition of Actinic by Northwest Coatings. Actinic is a manufacturer of UV and EB curable coatings for the graphic arts and industrial markets. The two firms will be collaborating on technical products to enhance product quality and customer service.
Gardner Asphalt was also active in acquisitions during 2005. In March, Gardner acquired Fields Company, a compatible manufacturer of roofing and waterproofing materials. This acquisition was made to increase the product offerings of Gardner and to expand manufacturing in the Northwest U.S. A few months earlier, Gardner had also acquired the ArmorFlex Roof restoration System from Honeywell and the product manufacturing business of Kold King Roofing Systems.
The trend of consolidating the facilities of the seller with an existing buyer facility continues. Examples include the acquisition of Foxcolor by Quest Specialty Chemicals, where the business was integrated into the manufacturing operations of Quest, and the RPM/Okon transaction where Okon's manufacturing operations will be transferred to a Zinsser plant.
The rampaging increase in raw materials also prevented a number of transactions from occurring because a number of sellers were unable to maintain their margins and realized that they probably would not be able to achieve the values they wanted within the marketplace. Rather than negotiate under these conditions, the owners have temporarily pulled their businesses off the market. †
Stephen Einhorn is president and Jackie Christiansen is vice president of Einhorn Associates, Inc., Milwaukee, WI, where they have specialized in paint and coating's mergers and acquisitions for many years. They can be contacted at firstname.lastname@example.org.