Valspar VAL has completed its takeover of the performance coatings businesses of Quest Specialty Chemicals for an undisclosed price. The company announced the deal along with its second-quarter fiscal 2015 (ended May 1, 2015) results last month.
The assets acquired by Valspar include products catering the automotive refinish and industrial markets. The acquired business had revenues of roughly $190 million last year.
The acquisition reinforces Valspar’s presence in the attractive automotive refinish end-market. It strengthens the company???s high-performance products range and service network as well as expands the distribution of a portfolio of preferred brands to customers.
Valspar saw its profits rise in the fiscal second quarter on gains from its cost-savings and productivity initiatives and new business wins in its coatings business. However, its sales fell on a double-digit decline in the paint business. Sales were hurt by lower demand for paint products in North America and unfavorable currency swings.
While Valspar backed its earnings guidance for fiscal 2015, it lowered its sales forecast for the year based on its updated estimate of currency translation impact. It now sees revenues to fall in the low single-digits year over year versus its prior forecast of roughly flat sales.
Valspar, which is one of the prominent paint makers along with Akzo Nobel AKZOY, PPG Industries PPG and Sherwin-Williams SHW, has a strong pipeline of new products and significant opportunities for share gains in both its Paint and Coatings segments globally. The company should also benefit from new business wins and productivity actions.
However, Valspar is exposed to currency headwind and volatility in raw material costs. Moreover, the overall demand environment remains uneven.
Valspar currently carries a Zacks Rank #3 (Hold).
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