Sherwin-Williams, with its 4,086 company-operated paint stores losing market share to big-box retailers, reached a deal on Sunday to acquire rival Valspar Corp. for about $11.3 billion including debt, or $113 per share.
Valspar, sold at big-box chains like Walmart and Lowe’s, will give Cleveland-based Sherwin-Williams more shelf space at those locations.
The deal, unanimously approved by both companies’ boards, represents a premium of about 41 percent to Valspar’s average stock price over the past 30 days.
Minneapolis-based Valspar also has a larger sales footprint in Europe and Asia, allowing Sherwin-Williams, which generates more than 80 cents out of every dollar of revenue from the US and Canada, to grow its brand around the world.
Valspar shares closed trading on Friday at $83.83.
Both companies said the deal would be immediately accretive — save for onetime costs — to the bottom line.
Sherwin-Williams had seen its huge chain of stores grow by 18 percent over the last four years — and the percentage of total sales from the segment grow steadily from 62 to 66 percent over that period. Until last year.
In 2015, according to regulatory filings, that percentage dropped to 63 percent. Total revenue eked out just a 1.9 percent gain from the prior year.
The companies expect to achieve $280 million of estimated annual synergies in the areas of sourcing, process and efficiency savings within two years.
The deal is expected to close by the first quarter of 2017.
Sherwin-Williams said it intends to finance the transaction through a combination of cash on hand, liquidity available under existing facilities and new debt.