• Login
    • Join
  • FOLLOW:
  • Subscribe Free
    • Magazine
    • eNewsletter
    Checkout
    • Magazine
    • News
    • Research
    • Markets & Technologies
    • Raw Materials
    • Top Companies
    • Directories
    • Jobs
    • Events
    • Microsites
    • More
  • Magazine
  • News
  • Research
  • Markets & Technologies
  • Raw Materials
  • Top Companies
  • Directories
  • Jobs
  • Events
  • Microsites
  • Current / Back Issues
    Features
    Business Corner
    Editorial
    Digital Edition
    eNewsletter Archive
    Our Team
    Editorial Guidelines
    Subscribe Now
    Advertise Now
    World Reports
    eBook
    Top Features
    CPMA Celebrates 100 Years of Leadership for the Color Pigments Industry

    Aerospace Coatings Market

    Energy Curing and Coil Coatings

    Lab/Testing Equipment Update

    High Performance and Special Effect Pigments
    Breaking News
    Online Exclusives
    Distributor News
    Financial News
    Paint & Coatings Manufacturer News
    People In the News
    Price Increases
    Product News
    Raw Materials & Equipment
    Video Bites
    Suppliers News
    Live From Shows
    Top News
    SONGWON Appoints New Leader Business Unit Tin Intermediates / PVC

    Cabot Corporation Achieves Platinum Rating from EcoVadis

    BASF Closes Purchase of DOMO Chemicals’ Shares in Alsachimie JV

    ROSS Introduces Custom Coaxial Mixer for Complex Formulations

    Covestro Expands Coatings and Adhesives Lab in Shanghai
    Top Companies report
    Market Research
    White Papers / Tech Papers
    Technical Papers
    Product Spec Sheets
    World Reports
    Adhesives and Sealants
    Aerospace Coatings
    Architectural Coatings
    Automotive Coatings
    Automotive Refinish
    Business Operation
    Color Trends & Forecast
    Construction Chemicals
    Corrosion Control
    Industrial Coatings
    Laboratory Equipment
    Marine Coatings
    Market Trends & Forecast
    Powder Coatings
    Production Equipment
    Radcure Coatings
    Special Purpose Coatings
    Wood Coatings
    "Green" Coatings

    ROSS Introduces Custom Coaxial Mixer for Complex Formulations

    AkzoNobel Vehicle Refinishes, Solera to Enable Data-Driven Sustainability

    PPG Revitalizes School in France as Part of COLORFUL COMMUNITIES 10-year Celebration

    Jotun Joins RightShip’s Zero Harm Innovation Partners Program

    Tnemec Launches New Waterborne Epoxy Products
    Additives
    Binders
    Pigments
    Solvents

    Safic Alcan to Distribute Evonik Functional Silanes in Central Eastern Europe

    CPMA Celebrates 100 Years of Leadership for the Color Pigments Industry

    Orion S.A. Earns 10 Safety Awards from ICBA

    OXERRA Expands Augusta Facility to Enhance U.S. Distribution Capabilities

    Münzing Expands U.S. Operations with New Production Facility in South Carolina
    Company Capabilities
    Buyers Guide
    Distributor Guide
    Add New Company
    International Buyers Guide Companies
    Shepherd Color Company, The

    Siltech Corporation

    Patcham USA

    Vibrantz Technologies

    WAB US Corp
    Industry Events
    Webinars
    Live From Show Event
    Top Events
    West Africa Coatings Show

    ABRAFATI SHOW 2025

    Paint Bangladesh 2025

    Paint Expo Eurasia

    CEPE Annual Conference
    Companies
    White Papers/Tech Papers
    Product Spec Sheets
    Equipment
    Literature/Brochures
    Videos
    International Buyers Guide Companies
    Shepherd Color Company, The

    Siltech Corporation

    Patcham USA

    Vibrantz Technologies

    WAB US Corp
    • Magazine
      • Current / Back Issues
      • Features
      • Editorial
      • Business Corner
      • Digital Edition
      • eNewsletter Archive
      • Editorial Guidelines
      • Subscribe Now
      • Advertise Now
    • Breaking News
    • Directories
      • Buyers Guide
      • Distributor Guide
      • Corporate Capabilities
      • Trade Associations
      • Add Your Company
    • Markets & Technologies
      • Adhesives and Sealants
      • Aerospace Coatings
      • Architectural Coatings
      • Automotive Coatings
      • Automotive Refinish
      • Business Operation
      • Color Trends & Forecast
      • Construction Chemicals
      • Corrosion Control
      • Industrial Coatings
      • Laboratory Equipment
      • Marine Coatings
      • Market Trends & Forecast
      • Powder Coatings
      • Production Equipment
      • Radcure Coatings
      • Special Purpose Coatings
      • Wood Coatings
      • "Green" Coatings
    • Raw Materials
      • Additives
      • Binders
      • Pigments
      • Solvents
    • World Reports
      • Africa Report
      • China Report
      • India/Asia Pacific Report
      • Europe Report
      • Latin America Report
      • Market Research
      • Russian Report
    • Top Companies
    • Online Exclusives
    • Glossary
    • Slideshows
    • Experts Opinions
    • Blog
    • eBook
    • Infographics
    • Videos
    • Podcasts
    • Whitepapers
    • Jobs
    • Microsites
      • Companies
      • White Papers/Tech Papers
      • Product Spec Sheets
      • Equipment
      • Literature/Brochures
      • Videos
    • Events
      • Industry Events
      • Live From Show Event
      • Webinars
    • About Us
      • About Us
      • Contact Us
      • Advertise With Us
      • Privacy Policy
      • Terms of Use
    Features

    Rivalry at the Top? Growing Concentration in the Coatings Industry

    An industry expert explains recent merger and acquisition activity in the paint and coatings industry.

    Rivalry at the Top? Growing Concentration in the Coatings Industry
    Trent Myers
    Trent Myers, Contributing Writer07.05.17
    The coatings industry in North America has been consolidating for decades, to the point that in certain end market segments, fewer than ten players – and in some cases, five or less – control over 90 percent of the market, and in most other markets, the level of concentration is at least 75 percent.  For the industry in total, the American Coatings Association and ChemQuest Group have estimated that the top ten manufacturers represent nearly 75 percent of total industry revenues and that the next ten represent about another 10 percent of the market. 

    Some sectors of the coatings industry are beginning to resemble the structure of the automobile, tobacco or defense industries, where a handful of global or super national behemoths have achieved large economies of scale, such that they control the vast majority of the market and are beginning to squeeze out, or more likely acquire, the remaining players. 

    In coatings, this trend toward concentration at the very top became especially evident about a decade ago, when Sherwin-Williams participated in an auction in an attempt to buy SigmaKalon, then the second largest coatings manufacturer in Europe.  Sherwin-Williams has a storied history as a successful buyer of coatings businesses, with a record extending back as far as the late 19th century.  SigmaKalon would have been the largest acquisition in its history, providing it with much needed diversification away from its dependence on architectural coatings in North America.  It therefore must have come as a disappointment when Sherwin Williams lost that auction to PPG, which paid over $3 billion for SigmaKalon.

    Sherwin-Williams tried again in 2012, when it reached an agreement to buy Comex S.A., Mexico’s largest paint company, for $2.34 billion.  Without a doubt, Comex was a nearly perfect strategic fit:  with a heavy emphasis on selling Comex branded products through a network of 3,300 independent owner-operated franchise stores throughout in Mexico, Comex was in essence a Latin American version of Sherwin-Williams.  In fact, the deal may have been too much of a perfect fit, at least for Mexican regulators who blocked the deal on the grounds that the combination would have given Sherwin-Williams over 50 percent of Mexico’s architectural coatings market.  Sherwin-Williams did receive a (much smaller) consolation prize of sorts, managing to acquire Comex’s U.S. and Canadian operations for $165 million, which included 314 company-operated stores and five manufacturing plants.  That left Comex’s remaining Latin American operations in play, and sensing an opening, PPG reached an agreement to acquire the business within three months after the Sherwin-Williams/Comex deal fell apart.  PPG paid $2.3 billion, essentially the same price that Sherwin-Williams originally had agreed to pay for the whole of Comex.

    At the time, PPG was in the process of realigning its business units to focus on paint and coatings, with acquisitions and divestitures of non-core businesses as the primary means of implementing this strategy.  Over the years, it had built up its coatings business through the acquisition of many smaller firms, but the most significant step in this direction after Comex was its purchase of AkzoNobel’s North American architectural coatings business in early 2013.  The transaction, valued at $1.05 billion, included all of Akzo’s architectural coatings manufacturing and distribution facilities, paint stores, and product lines in the U.S., Canada and the Caribbean.  The acquisition gave PPG 600 company-owned paint stores (the former ICI Glidden stores) as well as access to 10,000 additional points of distribution, including big-box home centers, mass merchants and independent dealers. 

    The transaction meant that PPG had passed both Sherwin-Williams and Akzo to claim the number one spot as the world’s largest coatings company, even though it remained the number two player in architectural coatings in North America, second to Sherwin-Williams.  But in less than two years, PPG had used acquisitions to become the greatest competitive threat to Sherwin-Williams on its home turf. 

    Given that this was the second time in seven years that PPG had come out ahead of Sherwin-Williams in competition for a significant “transformative” acquisition, it may have been inevitable that Sherwin-Williams’ management and Board of Directors would have been tempted to pursue something big.  Nevertheless, it came as a surprise to many industry professionals when Sherwin-Williams announced that it would acquire Valspar in March 2016 for an enterprise value of $11.3 billion or 15 times Valspar’s estimated 2016 EBITDA.  

    It was surprising because many thought that a merger between the second largest coatings company in the world (Sherwin-Williams), and the fifth largest (Valspar) would be out of the question due to anti-trust considerations.  Anticipating this, Sherwin Williams built some safeguards into the merger agreement allowing for a purchase price adjustment in the event one company or the other had to divest assets over a certain dollar limit in order to get the deal approved.  But it appeared that Valspar and Sherwin-Williams had remarkably little overlap that would concern regulators, and in fact, it may be that Valspar is the only major coatings company Sherwin-Williams could acquire that the U.S. Federal Trade Commission would allow.  Still, to obtain the necessary approvals, Valspar had to divest its North American industrial wood coatings business, which it sold to Axalta in April for $420 million.  The Sherwin-Williams/Valspar merger is now scheduled to close in Q2 2017, and it may have already closed by the time you read this.

    When the deal was announced, it was priced at a 41 percent premium over Valspar’s average daily closing stock price for the preceding 30 day period.  Such a large premium over the stock price and an EBITDA multiple of 15 may seem like a rich valuation for a coatings company, but Sherwin-Williams’ management expects that the acquisition will be immediately accretive to earnings and will generate approximately $280 million in synergies by 2018.  Factoring in these expected synergies reduces the Enterprise Value/EBITDA multiple to about 11 times.  

    From a strategic perspective, the transaction will strengthen Sherwin-Williams’ grip on architectural coatings in North America, adding about $1.0 billion to the approximate $9.4 billion in revenues generated by Sherwin-Williams’ Paint Stores and Consumer Groups.  But the real value of the transaction for Sherwin-Williams lies in its diversification benefits.

    The combined companies will have a more balanced portfolio, less dependent on architectural coatings and more international in scope.

    Once the deal closes, Sherwin-Williams will displace PPG and once again be the largest coatings company globally.  But recent developments indicate that it’s possible it won’t retain that position for long.  In March, PPG extended an unsolicited offer to acquire Akzo (3rd largest global coatings company) for about $22 billion.  Akzo’s board rejected that offer as too low, leading PPG to increase its offer twice more.  The last offer, made at the end of April, valued the company at $27.1 billion.  Akzo appears determined to remain independent, rejecting each offer in turn and proposing instead to increase value for its shareholders by spinning off or selling its specialty chemicals business.  PPG has some support from Akzo shareholders, including the activist investor Elliott Management Corp., which is calling for a shareholder meeting to oust Akzo’s chairman and pressure the board to begin negotiations with PPG.  As of this writing, the situation is unresolved.  It has been reported that PPG is considering a public tender offer for Akzo’s shares, which in effect would amount to a hostile takeover, something of a novelty in the coatings world.  That would be a risky undertaking with no assurance of success, because under Dutch law, Akzo’s board would retain the right to nominate replacement directors, so the winning shareholders in a takeover attempt may have less leverage than they would if Akzo was based in the U.S. 

    There also would be intense regulatory scrutiny on a PPG/Akzo deal.  The combined companies would have over $25 billion in revenues, dwarfing the roughly $16 billion that Sherwin-Williams/Valspar would have.  Its position at the top of the industry would be secure for the foreseeable future; there is no single company that Sherwin-Williams/Valspar conceivably could acquire that would enable it to rival PPG/Akzo in size.

    Despite all the drama, none of this should be interpreted as simply the jockeying of two giant companies vying for bragging rights of being number one.  It’s really all about economies of scale, and strategies to achieve scale are normal in consolidating industries.  The bigger the company can become, the more purchasing and pricing power it will have, along with manufacturing and distribution efficiencies, the ability to fund new market initiatives, and the wherewithal to weather economic downturns.  Quite simply, scale makes it easier to keep growing – something that is very important when the global economy itself may be growing at only 2 percent to 3 percent a year. 

    References

    1. “Enterprise value” refers to the market capitalization, or the total value of outstanding stock, plus the value of assumed debt.  Sherwin-Williams cash offer was for about $9.3 billion; it would also assume another $2 billion in Valspar’s debt, resulting in a total enterprise value of $11.3 billion.  EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization.

    Trent Myers is a vice president at Grace Matthews, a Milwaukee-based investment bank providing merger, acquisition and corporate finance advisory services to private and public companies across the chemical and materials value chain. Myers has been with Grace Matthews since its 1999 inception and has over 25 years of experience analyzing the chemical industry and its participants, including having performed over 100 business valuations over his career. Myers is the editor of Grace Matthews’ quarterly “Chemical Insights” newsletter.
    Related Searches
    • valspar
    • sherwin williams
    • architectural coatings
    • paint
    Suggested For You
    Sherwin-Williams Announces 2022 Color of the Year Sherwin-Williams Announces 2022 Color of the Year
    IM Group Wins Award for Best Industrial Tinting System in Brazil IM Group Wins Award for Best Industrial Tinting System in Brazil
    HGTV Home by Sherwin-Williams Announces Its 2022 Color Collection of the Year HGTV Home by Sherwin-Williams Announces Its 2022 Color Collection of the Year
    HGTV Home by Sherwin-Williams Announces 2022 Color Collection of the Year HGTV Home by Sherwin-Williams Announces 2022 Color Collection of the Year
    PPG Appoints Meri Vainikka as VP, Architectural Coatings, EMEA, North and East PPG Appoints Meri Vainikka as VP, Architectural Coatings, EMEA, North and East
    Lanco Paints & Coatings Expands in the Americas Lanco Paints & Coatings Expands in the Americas
    Paints and Coatings Market Worth $179.4 Billion by 2025: MarketsandMarkets Paints and Coatings Market Worth $179.4 Billion by 2025: MarketsandMarkets
    Sika to Divest European Industrial Coatings Business to Sherwin-Williams Sika to Divest European Industrial Coatings Business to Sherwin-Williams
    Sherwin-Williams: Embracing Discovery and Expression in Design for 2022 Sherwin-Williams: Embracing Discovery and Expression in Design for 2022
    Sun Chemical Launches Lead-Free Paliotan VIU Pigments Portfolio Sun Chemical Launches Lead-Free Paliotan VIU Pigments Portfolio
    Sherwin-Williams Issues 2020 Sustainability Report Sherwin-Williams Issues 2020 Sustainability Report
    PPG Earns EFFIE Award for Marketing Communications PPG Earns EFFIE Award for Marketing Communications
    Kayalar Kimya Kayalar Kimya
    Tnemec Tnemec
    Briolf Group Briolf Group

    Related Breaking News

    • Architectural Coatings | Breaking News | Color Trends & Forecast | Paint & Coatings Manufacturer News
      Sherwin-Williams Announces 2022 Color of the Year

      Sherwin-Williams Announces 2022 Color of the Year

      Sherwin-Williams revealed today that the 2022 Color of the Year is Evergreen Fog SW 9130, a nourishing and sophisticated gray-green.
      09.21.21

    • Breaking News
      IM Group Wins Award for Best Industrial Tinting System in Brazil

      IM Group Wins Award for Best Industrial Tinting System in Brazil

      Honored during the “25th Premio Paint & Pintura” award ceremony.
      09.17.21

    • Architectural Coatings | Breaking News | Color Trends & Forecast
      HGTV Home by Sherwin-Williams Announces Its 2022 Color Collection of the Year

      HGTV Home by Sherwin-Williams Announces Its 2022 Color Collection of the Year

      Softened Refuge Color Collection encourages simplicity and comfort with color.
      09.14.21


    • Architectural Coatings | Breaking News | Color Trends & Forecast | Paint & Coatings Manufacturer News
      HGTV Home by Sherwin-Williams Announces 2022 Color Collection of the Year

      HGTV Home by Sherwin-Williams Announces 2022 Color Collection of the Year

      Softened Refuge Color Collection encourages simplicity and comfort with color.
      09.14.21

    • Breaking News | People in the News
      PPG Appoints Meri Vainikka as VP, Architectural Coatings, EMEA, North and East

      PPG Appoints Meri Vainikka as VP, Architectural Coatings, EMEA, North and East

      Vainikka will have full accountability for the AC EMEA north and east region, which includes the Tikkurila legacy business.
      09.10.21

    Loading, Please Wait..
    Breaking News
    • SONGWON Appoints New Leader Business Unit Tin Intermediates / PVC
    • Cabot Corporation Achieves Platinum Rating from EcoVadis
    • BASF Closes Purchase of DOMO Chemicals’ Shares in Alsachimie JV
    • ROSS Introduces Custom Coaxial Mixer for Complex Formulations
    • Covestro Expands Coatings and Adhesives Lab in Shanghai
    View Breaking News >
    CURRENT ISSUE

    May/June 2025

    • Aerospace Coatings Market
    • Energy Curing and Coil Coatings
    • Lab/Testing Equipment Update
    • High Performance and Special Effect Pigments
    • View More >

    Cookies help us to provide you with an excellent service. By using our website, you declare yourself in agreement with our use of cookies.
    You can obtain detailed information about the use of cookies on our website by clicking on "More information”.

    • About Us
    • Privacy Policy
    • Terms And Conditions
    • Contact Us

    follow us

    Subscribe

    Latest Breaking News From Nutraceuticals World

    Gattefossé Opens New Facilities in Mumbai, India
    TSI Group Unveils myHMB + Vitamin D Logo
    Indena to Showcase Metabolic, Brain Health Solutions at In-Vitality 2024

    Latest Breaking News From Coatings World

    SONGWON Appoints New Leader Business Unit Tin Intermediates / PVC
    Cabot Corporation Achieves Platinum Rating from EcoVadis
    BASF Closes Purchase of DOMO Chemicals’ Shares in Alsachimie JV

    Latest Breaking News From Medical Product Outsourcing

    StimLabs's Umbilical Cord-Derived Wound Care Product Released in U.S.
    New Medical-Grade Bio-Based PVC Compounds Introduced
    Croívalve Reports 1st Tricuspid Coaptation Valve Implant in U.S. Feasibility Study

    Latest Breaking News From Contract Pharma

    Neurocrine Bioscience’s CRENESSITY Becomes Commercially Available in the U.S.
    Roche's Parkinson's Disease Drug Misses Primary Endpoint
    PTC Therapeutics Submits Vantiquinone NDA to FDA

    Latest Breaking News From Beauty Packaging

    Weekly Recap: Coty Sells SKKN, Henkel Recall, Awards, & More
    Rare Beauty to Host Pop-Up Event with Sephora UK
    Cloud Haircare Expands to Walmart Stores Nationwide

    Latest Breaking News From Happi

    Cosmetify Names Nikkie de Jager the World’s Most Powerful Beauty Influencer
    Big Lips in the Small Wonder
    L’Oréal’s Bioprinted Skin & Dove’s Deodorant Launch

    Latest Breaking News From Ink World

    BCF Sponsors Parliamentary Event to Engage with Policymakers
    Weekly Recap: DIC Corporation, BASF, Toyo Printing Inks Top This Week’s Stories
    INX International Launches Innova Plus NCF Nitrocellulose-Free Inks

    Latest Breaking News From Label & Narrow Web

    Mexico's Flexopolis adds second Bobst flexo press
    Paramount Labels installs Rotatek Brava 450
    Esko teams with Bobst for smartGRAVURE System

    Latest Breaking News From Nonwovens Industry

    Drylock Technologies Offers Packaging Breakthrough
    Premier Care Industries Expands Manufacturing Operations
    What You’re Reading on Nonwovens-Industry.com

    Latest Breaking News From Orthopedic Design & Technology

    David Thordarson Takes Charge of American Orthopaedic Foot & Ankle Society
    UPM Biomedicals Launches FibGel Injectable Nanocellulose Hydrogel for Medical Devices
    ONWARD Medical Attracts €50 Million in Capital

    Latest Breaking News From Printed Electronics Now

    Weekly Recap: DuPont, SEMI, Sun Chemical Top This Week’s Stories
    ORNL’s 3D-Printed Metal Molds Poised to Accelerate US Auto Manufacturing
    SRI, NSIC are Catalyzing Corporate Innovation in Japan

    Copyright © 2025 Rodman Media. All rights reserved. Use of this constitutes acceptance of our privacy policy The material on this site may not be reproduced, distributed, transmitted, or otherwise used, except with the prior written permission of Rodman Media.

    AD BLOCKER DETECTED

    Our website is made possible by displaying online advertisements to our visitors.
    Please consider supporting us by disabling your ad blocker.


    FREE SUBSCRIPTION Already a subscriber? Login