Sherwin-Williams Close to FTC Deal

Shares of Valspar (VAL) rose sharply Thursday after Sherwin-Williams (SHW) 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 the business to be divested has been identified but didn't elaborate. "We're obviously very limited in what we can comment on regarding this," he said on the company's call to discuss fourth-quarter earnings. "We're very pleased with the progress we're making.

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're working closely and, I think, quite well with the FTC," 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.

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