PPG Industries (PPG) Wraps Up $2.3B Comex Buyout

PPG Industries (PPG) said that it has completed its purchase of leading Mexican paint company – Consorcio Comex S.A. de C.V. – for $2.3 billion. This follows the recent favorable ruling of Mexico’s Federal Economic Competition Commission (“FECC”) on the deal which was announced in Jun 2014.

PPG Industries’ shares rose 3.4% to close at $205.25 on Wednesday. The stock is up roughly 10% year-to-date and 14% over a year.

Privately-held Comex makes architectural and industrial coatings and related products in Mexico. The company has 8 manufacturing facilities and 6 distribution centers and markets its products through over 3,700 stores in Mexico and Central America. The entity had revenues of roughly $1 billion last year.

The acquisition, which is the second-largest in PPG’s history, is a strategic fit and highly complementary to PPG as it will boost its foothold in Mexico and Central America by offering a leading architectural coatings portfolio. The deal is in line with the company’s strategy to broaden its global coatings business.

PPG Industries expects the transaction to add 65 cents to 75 cents to its earnings per share, barring acquisition and financing costs, in 2015. It also expects to achieve acquisition-related synergies of $30 million to $40 million over two years.

PPG Industries is taking steps to grow its business inorganically by making a bevy of acquisitions. The acquisition of Akzo Nobel’s (AKZOY) North American architectural coatings business, in Apr 2013, has bolstered its branded paint product offerings and scale in the North American architectural paint market.

Moreover, PPG Industries acquired specific assets of specialty coatings company Deft Incorporated last year in an effort to boost its position in the aerospace industry. The acquisition of Hi-Temp Coatings Technology, in Mar 2014, also strengthened PPG Industries’ protective and marine coatings business. The company also bought Panama-based Canal Supplies in Jun 2014, which reinforces its protective and marine coatings business in Central America.

More recently, PPG purchased architectural paint distributor Westmoreland Supply. The buyout, which closed last month, is expected to broaden PPG’s company-owned stores network in North America.

PPG Industries is a Zacks Rank #3 (Hold) stock.

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