Sherwin-William and Valspar both believed that the combination will benefit customers and that it will receive all necessary regulatory clearances. The acquisition will be a strategic fit for both parties, as it extends Sherwin-Williams capabilities into new geographies and applications, including a scale platform to grow in Asia-Pacific and EMEA. Customers will benefit from an increased range of products, enhanced technology, innovative capabilities, and cost synergies. The annual cost synergies were estimated to be $280 million in the areas of sourcing, SG&A and process and efficiency savings within two years and a long term annual synergy of $320 million.
In Valspar’s case, the sale of the company at a premium to a larger entity like Sherwin-William would lead to a greater dividend return for Valspar’s stockholders as compared to a proposed stock-for-stock merger (Valspar, 2016).…show more content… Sherwin-Williams will have the right to terminate the transaction in the event that required divestures exceed $1.5 billion in revenues for 2015. As a result, it creates a sense of certainty that both parties will be able to reach closing. Sherwin-Williams and Valspar believe that no or minimal divestitures should be required to complete the transaction, after receiving a second request for additional information and documentary material, as it was subject to approval of Valspar’s shareholders and had to meet other closing condition requirements, such as, expiration and termination of the waiting
