Sherwin-Williams to Acquire BASF's Brazilian Architectural Paints Business for $1.15 Billion in All-Cash Transaction

Rhea-AI Summary

Sherwin-Williams (NYSE: SHW) has announced a definitive agreement to acquire BASF's Brazilian architectural paints business (Suvinil) for $1.15 billion in an all-cash transaction. The acquisition targets a business with annual sales of approximately $525 million for 2024, including the well-known Suvinil and Glasu! brands.

The acquired business employs around 1,000 people and operates two strategic production facilities in Brazil's Northeast and Southeast regions. The transaction will be financed through a combination of cash, existing facilities, and new debt, with the purchase price representing a low teens EBITDA multiple after anticipated synergies.

The deal is expected to close in the second half of 2025, subject to Brazilian regulatory approval. Upon completion, Suvinil will be integrated into Sherwin-Williams Consumer Brands Group, with a focus on customer experience and employee opportunities.

Positive

• Acquisition adds $525 million in annual sales to SHW's portfolio
• Strategic expansion in Brazilian market with established brands
• Two production facilities in key Brazilian regions included in deal
• Expected EBITDA margin expansion through sales acceleration and cost synergies
• Net debt-to-EBITDA ratio to remain within target range of 2.0-2.5x

Negative

• Significant cash outlay of $1.15 billion required
• New debt financing needed to complete transaction
• Integration costs and expenses expected in short term
• Regulatory approval risk in Brazil

Insights

Financial Analyst

This $1.15 billion acquisition marks a transformative move for Sherwin-Williams in Latin America's largest market. The purchase of BASF's Brazilian architectural paints business, with $525 million in annual sales, represents a revenue multiple of approximately 2.2x, suggesting an attractive valuation considering the strategic benefits and synergy potential.

The transaction's structure is particularly noteworthy for three reasons: First, the all-cash nature of the deal, combined with the company's commitment to maintaining its net-debt to EBITDA ratio between 2.0-2.5x, demonstrates strong financial discipline and balance sheet management. Second, the low-teens EBITDA multiple post-synergies indicates significant operational improvement opportunities. Third, the acquisition of two strategically located production facilities eliminates the need for immediate capital expenditure on manufacturing infrastructure.

The strategic value extends beyond immediate financials. Brazil's architectural paint market has historically shown resilience during economic cycles, driven by a large housing stock and ongoing urbanization. The Suvinil brand's 60-year heritage and strong recognition among professional painters and specifiers provides Sherwin-Williams with immediate market credibility and a premium positioning that typically takes decades to build.

Operational synergies are likely to materialize in several areas:

• Supply chain optimization through integration of two manufacturing facilities
• Raw material procurement advantages through increased scale
• Cross-selling opportunities across combined distribution networks
• Technology and innovation sharing between brands

The timing of this acquisition is strategic, as it positions Sherwin-Williams to capture market share during Brazil's expected infrastructure and housing development cycle. The transaction's expected closure in H2 2025 allows sufficient time for regulatory approval while providing a clear timeline for integration planning.

• Adds a leading producer of architectural paints in Brazil and the
  highly-recognized Suvinil brand to Sherwin-Williams portfolio
• Expands and accelerates existing profitable growth opportunity in Brazil with comprehensive product
  offering and extensive distribution through paint stores and regional home centers
• Annual sales of approximately $525 million; significant growth and operational synergy opportunities
• Sherwin-Williams resulting net-debt to EBITDA ratio following financing to remain
  in targeted range of 2.0 to 2.5 times
• Expected to close in the second half of 2025 subject to customary closing conditions,
  including Brazilian regulatory approval

CLEVELAND, Feb. 17, 2025 /PRNewswire/ -- The Sherwin-Williams Company (NYSE: SHW) today announced it has entered into a definitive agreement with BASF Group (ISIN: DE000BASF111) to acquire BASF's Brazilian architectural paints business ("Suvinil") for $1.15 billion in an all-cash transaction. 

The business is a leading provider of architectural paints in Brazil and had sales of approximately $525 million for the year ended December 31, 2024. The business develops, manufactures and sells a comprehensive portfolio of innovative products under the well-known Suvinil and Glasu! brand names to professional painters, designers, architects, general contractors and consumers across the country. The company employs approximately 1,000 employees and operates two production facilities strategically located in the Northeast and Southeast regions of Brazil.

"Suvinil is a premier provider of architectural paints in Brazil and will accelerate our commitment to provide industry-leading solutions for our customers while delivering profitable above-market growth in the region," said Heidi G. Petz, Sherwin-Williams Chair, President and Chief Executive Officer. "For more than 60 years, Suvinil has been synonymous with innovation and quality. The business is highly complementary to Sherwin-Williams in Latin America, as the Suvinil brand is well-known and highly-trusted by purchasing influencers and specifiers across the value chain. We are excited to capitalize on the strengths of both companies to further enhance value for customers. Upon the close of the transaction, we are confident that Sherwin-Williams growth mindset and continuous improvement disciplines will enable us to achieve meaningful sales acceleration and cost synergies which we expect will expand Suvinil's EBITDA margin, excluding one-time integration expenses. We have tremendous respect for the expertise and dedication of the Suvinil team, and we are excited about the opportunities that this combination will provide to customers and employees."

"The signing marks an important step in unlocking the value of our standalone businesses, and I am delighted that we have made such rapid progress in finding a new home for Suvinil," said Anup Kothari, member of the Board of Executive Directors of BASF SE and responsible for the Coatings division. "We are convinced that the decorative paints business will continue to thrive as part of Sherwin-Williams. We are deeply grateful to our employees for their hard work and dedication, which have made Suvinil the most recognized brand for decorative paints in Brazil."

Sherwin-Williams intends to finance the transaction through a combination of cash on hand, liquidity available under existing facilities and new debt. The purchase price represents a low teens EBITDA multiple following anticipated post transaction synergies net of one-time costs. The transaction is expected to close during the second half of 2025 and is subject to customary closing conditions, including Brazilian regulatory approval. Upon close, Suvinil will become part of the Sherwin-Williams Consumer Brands Group with a joint focus on a seamless experience for customers and opportunities for employees.

ABOUT THE SHERWIN-WILLIAMS COMPANY

Founded in 1866, The Sherwin-Williams Company is a global leader in the manufacture, development, distribution, and sale of paint, coatings and related products to professional, industrial, commercial, and retail customers. The Company manufactures products under well-known brands such as Sherwin-Williams^®, Valspar^®, HGTV HOME^® by Sherwin-Williams, Dutch Boy^®, Krylon^®, Minwax^®, Thompson's^® WaterSeal^®, Cabot^® and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams^® branded products are sold exclusively through a chain of more than 5,000 Company-operated stores and branches, while the Company's other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors. The Sherwin-Williams Performance Coatings Group supplies a broad range of highly-engineered solutions for the construction, industrial, packaging and transportation markets in more than 120 countries around the world. Sherwin-Williams shares are traded on the New York Stock Exchange (symbol: SHW). For more information, visit www.sherwin.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in this press release constitute "forward-looking statements" within the meaning of federal securities laws. These forward-looking statements are based upon management's current expectations, predictions, estimates, assumptions and beliefs concerning future events and conditions with respect to Sherwin-Williams, the business to be acquired, the announced transaction, and other matters, and include discussions of strategy, business, operating and financial projections, guidance and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of the announced transaction, and statements about future performance, operations, products and services. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as "anticipate," "aspire," "believe," "could," "estimate," "expect," "goal," "intend," "may," "plan," "potential," "project," "seek," "should," "strive," "target," "will," or "would," or the negative thereof or comparable terminology.

Readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside our control, that could cause actual results to differ materially from such statements and from our historical results, performance and experience. These risks, uncertainties and other factors include such things as: the possibility that the closing conditions to the announced transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant a necessary regulatory approval; delay in closing the transaction or the possibility of non-consummation of the transaction; the potential for regulatory authorities to require divestitures in connection with the announced transaction; general business and economic conditions in the United States and worldwide; inflation rates, interest rates, unemployment rates, labor costs, healthcare costs, recessionary conditions, geopolitical conditions, terrorist activity, armed conflicts and wars, public health crises, pandemics, outbreaks of disease, and supply chain disruptions; shifts in consumer behavior driven by economic downturns in cyclical segments of the economy; shortages and increases in the cost of raw materials and energy; catastrophic events, adverse weather conditions and natural disasters (including those that may be related to climate change); the loss of any of our largest customers; increased competition or failure to keep pace with developments in key competitive areas of our business; cybersecurity incidents and other disruptions to our information technology systems; our ability to attract, retain, develop and progress a qualified global workforce; our ability to successfully integrate past and future acquisitions into our existing operations, as well as the performance of the businesses acquired; risks and uncertainties associated with our expansion into and our operations in Asia, Europe, South America and other foreign markets; policy changes affecting international trade, including import/export restrictions and tariffs; our ability to achieve our strategies or expectations relating to sustainability considerations, including as a result of evolving legal, regulatory, and other standards, processes and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite suppliers, energy sources, or financing, and changes in carbon markets; damage to our business, reputation, image or brands due to negative publicity; the infringement or loss of our intellectual property rights or the theft or unauthorized use of our trade secrets or other confidential business information; a weakening of global credit markets or changes to our credit ratings; our ability to generate cash to service our indebtedness; fluctuations in foreign currency exchange rates and changing monetary policies; our ability to comply with a variety of complex U.S. and non-U.S. laws, rules and regulations; increases in tax rates, or changes in tax laws or regulations; our ability to comply with numerous, complex and increasingly stringent domestic and foreign health, safety and environmental (including related to climate change and chemical management) laws, regulations and requirements; our liability related to environmental investigation and remediation activities at some of our currently- and formerly-owned sites; the nature, cost, quantity and outcome of pending and future litigation, including lead pigment and lead-based paint litigation; and the other risk factors discussed in Part 1, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and our other reports filed with the SEC.

Readers are cautioned that it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results and that the above list should not be considered a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.

INVESTOR RELATIONS CONTACTS:

Jim Jaye                                                                                              
Senior Vice President, Investor Relations & Corporate Communications                                           
Direct: 216.515.8682
investor.relations@sherwin.com

Eric Swanson
Vice President, Investor Relations
Direct: 216.566.2766                                                             
investor.relations@sherwin.com                                                         

MEDIA CONTACT:

Julie Young
Vice President, Global Corporate Communications
Direct: 216.515.8849
corporatemedia@sherwin.com

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FAQ

How much is Sherwin-Williams (SHW) paying for BASF's Brazilian paint business?

Sherwin-Williams is paying $1.15 billion in an all-cash transaction for BASF's Brazilian architectural paints business.

What is the annual revenue of BASF's Suvinil business being acquired by SHW?

The Suvinil business generated approximately $525 million in sales for the year ended December 31, 2024.

When is the SHW-Suvinil acquisition expected to close?

The acquisition is expected to close in the second half of 2025, subject to Brazilian regulatory approval.

How will Sherwin-Williams (SHW) finance the Suvinil acquisition?

SHW will finance the transaction through a combination of cash on hand, existing facilities, and new debt.

What is the EBITDA multiple for SHW's Suvinil acquisition?

The purchase price represents a low teens EBITDA multiple following anticipated post-transaction synergies net of one-time costs.

How many employees and facilities are included in SHW's Suvinil acquisition?

The acquisition includes approximately 1,000 employees and two production facilities located in Brazil's Northeast and Southeast regions.