Sherwin-Willians saw Suvinil as a unique opportunity-bought fast and paid according to

Suvinil is the leader of the decorative paint market in Brazil, with 35% share. (Image: Jetcityimage/ Istock)

The acquisition, announced last Monday (17), of the Suvinyl It is the largest business of the American SHERWIN-WILLIAMS in Latin America. With the purchase, for $ 1.15 billionor R $ 6.5 billion for the dollar of the day, all pay in cash, the US company can jump from less than 6% from the Brazilian paint market to 41%.

Suvinil is the leader of the decorative paint market in Brazil, with 35% share. The second largest is Akzonobel, owner of the Coral brand, with just over 25%. Last year, Suvinil earned $ 525 million ($ 3 billion for the dollar of the day).

The acquisition needs the endorsement of the Administrative Council for Economic Defense (Cade). As it does not raise so much market concentration, sources believe it is approved without further restrictions.

The sale of Suvinil was a quick process for mergers and acquisition standards (M&A) in Brazil and worldwide, especially when they are involved in the billion dollars and drag themselves for months. The German company itself recognizes the speed of sale. “I am delighted that we have made such a fast progress in finding a new home to Suvinil,” said Anup Kothari, a member of the BASF Executive Board, in a press release.

BASF announced its intention to sell Suvinil in September last year. The decision came because Brazil is the only market in the German group in the world where the company was still operating in the field of decorative paints, which was no longer focused on the group.

In January this year, a competitive process began in the market, which attracted companies and funds specializing in buying companies (private equities). On the last day 7 ended the deadline for receiving non -binding proposals.

With small participation in the Brazilian market, and wanting to grow more, Sherwin-Williams, founded in 1866 in the United States, worked to take the brand and presented itself more aggressively, sewing an exclusive agreement in the negotiation, according to sources . “The 6% participation was not where the company wanted to be,” notes an interlocutor.

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Foreign rule

Without a large company in Brazil, with the market dominated by foreigners, it was clear that the closing of the business would involve a foreign group, unlike many recent mergers, where Brazilian companies have had predominance. For example, the acquisition of Swiss Julius Baer by BTG Pactual.

“The paint industry is very consolidated globally, the transactions end up having two or three buyers anywhere. And an opportunity like Suvinil doesn’t appear every day, ”said a source close to the deal.

Sherwin-Williams announced that the multiple of the business was in the low teens, the expression of English to refer to the numbers of 13 to 19, compared to EBITDA (profit without taxes, interest and amortization). A private equity fund, which buys participation in companies, would hardly pay this amount, argues a source.

“The business is highly complementary to Sherwin-Williams in Latin America, as the Suvinil brand is well known,” said Sherwin-Williams president and CEO Heidi G. Petz in a press release.

Citi advised Sherwin-Williams on the acquisition. BASF was advised by Deutsche Bank in the sales process, as the Broadcast column had already revealed in December.

Among the legal advisors, Sherwin hired the Jones Day and BMA offices. BASF had the help of Linklaters and Todorov, Giannini & Nisiyama.

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