PPG to Buy Mexican Paint Maker That Sherwin-Wi

PPG Industries Inc. (PPG) agreed to buy Consorcio Comex SA for about $2.3 billion, picking off the Mexican coatings and paint maker that competitor Sherwin-Williams Co. failed to buy because of antitrust issues.

Acquiring closely held Comex will give PPG paint-making capacity in Mexico and Central America and sales through about 3,600 stores in the region, Pittsburgh-based PPG said in a statement today. PPG rose the most since October.

PPG should clear regulatory hurdles because it has “negligible” architectural coatings sales in Mexico and Central America and won’t hamstring competition as a result of the acquisition, said Charles E. Bunch, PPG’s chairman and chief executive officer, in a conference call with analysts today.

Sherwin-Williams., a U.S. rival to PPG, made a $2.34 billion bid for Comex in 2012 in an attempt to double Latin American sales. That deal was blocked by Mexican regulators, who said the combined company would have had a market share of as much as 58 percent, depending on the product, or as much as 10 times that of the nearest competitor.

PPG started one-on-one discussions with Comex about a potential deal in the middle of the second quarter, Bunch said. PPG is interested in, and has the capacity for, further acquisitions in 2014, he said.

Regulatory Review

The regulatory review process should last about four to six months, Bunch said. The deal would boost PPG’s portion of total sales that come from Latin America to 11 percent from 5 percent. Bunch said he isn’t yet familiar with Comex’s sales strategy.

PPG has the ability to complete the deal using cash alone, Bunch said. Still, the company hasn’t ruled out financing the deal with debt if that makes more sense.

Sherwin-Williams acquired Comex’s U.S. and Canada operations for $165 million in September and terminated the offer for the rest of the company in April.

This latest Comex bid would be PPG’s largest deal since its acquisition of SigmaKalon Group BV of the Netherlands for about $3 billion in 2008, according to data compiled by Bloomberg.

Excluding acquisition costs, the takeover will immediately add to earnings, PPG said. Its shares gained 2.9 percent to close at $210.15 in New York. The stock earlier advancing as much as 4.4 percent, the most since Oct. 17, 2013.

Comex, founded in 1952, had sales of about $1 billion in 2013, according to the statement.

A PPG spokesman declined to comment on which entities advised the parties in the deal.

To contact the reporters on this story: Andrew Noel in London at anoel@bloomberg.net; Tim Loh in New York at tloh16@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net Robin Saponar

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