Coatings and specialty products maker PPG Industries, Inc. (PPG) said Monday that it has agreed to acquire Mexico-based architectural, industrial and specialty coatings company Consorcio Comex, S.A. de C.V. for $2.3 billion. The transaction will enable PPG to boost its presence in Mexico and Central America.
Privately-held Comex makes coatings and related products in Mexico and sells them in Mexico and Central America through about 3,600 stores that are independently owned and operated by more than 700 concessionaires. Comex also sells its products through regional retailers, wholesalers and direct sales to customers.
Comex has about 3,900 employees, eight manufacturing facilities and six distribution centers in Mexico. The company, founded in 1952, had sales of about $1 billion in 2013.
Charles Bunch, chairman and CEO of PPG said, "The acquisition is very complementary to PPG as it adds a leading architectural coatings business in Mexico and Central America, a region where we have negligible architectural coatings presence. We are excited to participate in the growing Mexican economy and look forward to working with the Comex team as we integrate the business into PPG."
Cleveland, Ohio-based paint maker Sherwin-Williams Co. (SHW) had earlier attempted to acquire the Mexico business of Comex, but failed in its bid after Mexico's federal competition watchdog rejected the deal.
However, Sherwin-Williams completed the acquisition of the U.S. and Canadian business of Comex in September 2013, saying it paid $90 million in cash and assumed liabilities valued in the range of $75 million.
Pittsburgh, Pennsylvania-based PPG said that excluding non-recurring acquisition-related costs, the deal to acquire Comex will be immediately accretive to its earnings. The company anticipates acquisition-related synergies of 3 to 4 percent of acquired sales will be achieved over a two-year period.
PPG plans to fund the acquisition primarily using currently held cash and short-term investments. However, the company indicated it may fund a portion of the purchase price through the addition of debt.
As of March 31, 2014, PPG reported cash and short-term investments of $3 billion. On April 17, 2014, the company's board of directors approved a $2 billion share repurchase authorization and increased the quarterly dividend payable June 12, 2014, by 10 percent versus the previous quarterly dividend.
In early June, PPG said its North American architectural coatings business agreed to acquire Masterwork, a Pittsburgh-based independent architectural paint distributor, and also Homax Group, Inc., a supplier of decorative wall and ceiling texture repair products.
Homax is a portfolio company of private equity firm Olympus Partners.Financial terms of both these deals were not disclosed.
PPG closed Friday's trading at $204.05. In Monday's pre-market trades, the stock is up $5.94 or 2.91 percent to $209.99.
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