PPG Industries PPG has further expanded its foothold in Central America with the purchase of Consorcio Latinoamericano for an undisclosed price. Consorcio runs a network of 57 paint stores in Central America.
Consorcio operated as a concessionaire network for PPG-Comex, which is PPG Industries’ architectural paint and coatings business in Mexico and Central America. PPG Industries wrapped up the acquisition of Mexico’s leading paint company Comex for $2.3 billion in Nov 2014.
With the Consorcio buyout, PPG will now operate 87 company-owned stores in Belize, El Salvador, Guatemala, Honduras, Costa Rica, Nicaragua and Panama. The company intends to brand stores in Panama with its renowned Glidden brand.
The purchase boosts PPG’s operations in the growing Central American market and allows the company to grow the Glidden brand in Panama leveraging an extended stores network. It also enables the company to offer additional products to customers in Central America.
PPG Industries has a diversified business and a leading position in several paints and coatings end markets. Healthy momentum across automotive OEM, automotive refinish and aerospace markets is expected to support its results this year.
PPG Industries should continue to gain from synergies from acquisitions. The acquisition of Akzo Nobel’s AKZOY North American architectural coatings business in 2013 has bolstered its branded paint product offerings and scale in the North American architectural paint market.
Moreover, the buyout of Comex represents a major move by PPG Industries as it reinforces its architectural coatings business in Mexico and Central America by offering a leading architectural coatings portfolio.
However, PPG Industries is exposed to unfavorable currency exchange translation (especially in emerging markets) stemming from a stronger dollar. In addition, some of the company’s end-markets including commercial construction still remain somewhat sluggish.
PPG Industries is a Zacks Rank #3 (Hold) stock.
Better-ranked stocks in the chemical space include LyondellBasell Industries N.V. LYB and Celanese Corporation CE with both sporting a Zacks Rank #1 (Strong Buy).
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