FTC review Sherwin Williams/Valspar merger

Paint makers Sherwin-Williams and Valspar remain confident their multi-billion pound merger will go ahead in the first quarter of next year despite a request for additional information from US regulators.

Both companies say they expected the request from the US Federal Trade Commission (FTC), which was issued under notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).

That the request was made by the FTC rather than the Department of Justice could suggest a retail aspect to the review.

Sherwin-Williams agreed to buy Valspar in March, a deal which would give them a significant presence across Asia-Pacific and Europe, the Middle East and Africa (EMEA) regions and enhance its competitive profile against rivals such as PPG Industries and AkzoNobel.

The impact of the second request from the FTC is to extend the waiting period until 30 days after the companies have substantially complied with the request, unless that period is voluntarily extended by the parties or terminated earlier by the FTC.

Both Sherwin Williams and Valspar say they are cooperating fully with the FTC and expect that ‘no or minimal divestitures’ should be required to complete the transaction.

However, the merger agreement does include a potential price cut if divestitures required to obtain antitrust clearance are above a certain threshold.

The deal also requires antitrust approvals in Australia, Brazil, Canada, China, Ecuador, the European Union, Mexico, Russia and Vietnam.