The deal was unanimously approved by the boards of both companies and represents a premium of about 41% to Valspar's volume-weighted average share price for the 30 days up to and including Friday.
"The transaction results in an exceptional, diversified array of strong brands and technologies, accelerates Sherwin-Williams growth strategy by expanding its global platform in Asia-Pacific and EMEA, and also adds new capabilities in the packaging and coil segments," the companies said in a news release.
The companies expect the deal to close by the end of first-quarter 2017.
According to the release, the combined company is expected to have pro forma 2015 revenue of about $15.6 billion and adjusted EBITDA (including estimated annual synergies) of about $2.8 billion, with roughly 58,000 employees.
The companies expect $280 million of estimated annual cost savings in the areas of sourcing, SG&A and process and efficiency savings within two years of closing the deal, with a long-term cost-savings target of $320 million.
In addition to adding to earnings immediately, excluding one-time costs, the companies expect the combination to "meaningfully enhance" the company's ability to generate cash flow.
Sherwin-Williams will continue to be headquartered in Cleveland and maintain a significant presence in Minneapolis, the company said.
Sherwin-Williams officials weren't immediately available for comment.
Shares of Sherwin-Williams closed Friday at $288.69, up $1.60. Valspar stock ended the week at $83.83, down 86 cents.