Friday, September 28, 2007

Sherwin Williams: Persistant Rumors

More rumors, true?

Sherwin-Williams (SHW) shares have been trading higher on buyout rumors. The paintmaker and retailer, which has a market cap of $8.5 billion and long-term debt of $292 million, has been the subject of rumors for the better part of a month now. The coatings industry is undergoing rapid consolidation the past 6 months and Sherwin, with its name recognition and pristine financials would be a delicious target for someone. Companies like Dow Chemical (DOW) have publicly announced their intentions to grow their coatings business by billion dollar increments and that can only be done through acquisitions. The recent Akzo Nobel buyout of ICI chemical served to further heat up the rumor mill. Dow had an interest in ICI but not at the price Nobel paid. Now that ICI is gone, could a bid for Sherwin be coming?

However, Sherwin may not be a takeout candidate, but instead an acquirer,based on recent actions. The company recently bought Spokane, Wash.-based Columbia Paint & Coatings Co. after completing the purchase of Philadelphia based MA Bruder & Sons. The purchases followed Sherwin-Williams' CEO Christopher M. Connor's comments earlier in the year that the company would continue to expand in the "do-it-yourself" market through acquisitions.


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