Shares of Valspar (VAL) - Get Valaris Ltd. Report rose sharply Thursday after Sherwin-Williams (SHW) - Get Sherwin-Williams Company Report CEO John Morikis indicated a deal is in the works with the Federal Trade Commission that will allow his company to close its proposed $9 billion acquisition of Valspar soon.
Valspar shares opened at $111.16 Thursday, up sharply from Wednesday's close of $108.31. The shares closed Thursday at $110.74. They were down slightly by mid-afternoon Friday.
Sherwin-Williams shares were up $21.58 Thursday to close at $305. They were up again slightly by mid-afternoon Friday.
Morikis said thebusinesstobedivestedhasbeenidentified but didn't elaborate. "We'reobviouslyverylimitedinwhatwecancommentonregardingthis," he said on the company's call to discuss fourth-quarter earnings. "We'reverypleasedwiththeprogresswe'remaking.
Morikis did say the size of the divestiture will be well below the threshold that would trigger a cut in the price Sherwin-Williams agreed to pay for Valspar.
"We'reworkingcloselyand, Ithink,quitewellwiththeFTC," he said.
In the merger agreement with Valspar, Sherwin-Williams agreed to divest or license assets of either company representing up to $1.5 billion of net sales. If Sherwin-Williams has to divest in excess of $650 million of net sales, based on Valspar's 2015 fiscal year revenues, excluding Australia, then the purchase price for the merger would drop from $113 per share for Valspar shares to $105 per share.