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Susquehanna: Sherwin-Williams Worth $370/Share After Valspar Acquisition


Susquehanna’s Don Carson upgraded the rating on Sherwin-Williams Co (NYSE: SHW) from Neutral to Positive, while raising the price target from $260 to $370, following the announcement that the company has entered into an agreement to acquire The Valspar Corp (NYSE: VAL).

Acquiring Valspar

Sherwin-Williams announced it has entered into an agreement to acquire Valspar for $113 per share, representing a 41 percent premium to the latter company’s trailing 30-day average share price.

“We believe the deal to be accretive to cash EPS by close to $4.00 by 2018 including at least $2.05 in synergies,” Carson stated, while adding, “The transaction strengthens SHW's Consumer Group which sells architectural paint through third party retailers in the US as well as its Global Finishes group which sells industrial coatings.”

Carson believes there is little antitrust risk to the deal, since the two companies use different architectural channels in the U.S. and there is no overlap in the industrial coating business.

Competing Bids Unlikely

In addition, competing bids are unlikely, especially given that Akzo Nobel has recently exiting the North American architectural coating market, while PPG Industries, Inc. (NYSE: PPG) has an “overlapping architectural position at Lowes and overlap in packaging and coil coatings.”

Latest Ratings for SHW

Nov 2019Initiates Coverage OnHold
Oct 2019MaintainsNeutral
Oct 2019ReiteratesBuy

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Posted-In: Don Carson Susquehanna Financial GroupAnalyst Color Long Ideas Upgrades Price Target Analyst Ratings Trading Ideas


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