In a move to broaden its supply network in Central America, coatings giant PPG Industries (PPG) has agreed to buy substantially all of the assets of Panama-based Canal Supplies, Inc. for an undisclosed price.
Canal Supplies distributes protective and marine coatings to customers in Central America. The transaction, which is subject to customary closing conditions, is expected to consummate in second-quarter 2014.
The buyout will expand the access of PPG Industries’ products to customers throughout Central America, especially in growth markets for protective and marine coatings such as Costa Rica and Panama.
The Panama Canal is a major regional economic hub for the protective and marine coatings industry and the acquisition will enhance PPG Industries’ ability to meet growing demand for its products in the region.
PPG Industries saw its profit jump in fourth-quarter 2013, reported on Jan 16, on strength in its coatings business and its cost management initiatives. Revenues rose by double digits on healthy momentum across aerospace and automotive markets. PPG Industries sees favorable market conditions across these end-markets in 2014.
PPG Industries has a diversified business, both in terms of products offered and geographical presence. It is a global leader in protective and marine coatings and has a leading position in several paints and coatings end markets.
PPG Industries is taking steps to grow its business inorganically by making a number of acquisitions. Moreover, the company is pursuing a $102 million business restructuring focused on achieving cost synergies associated with its takeover of Akzo Nobel’s (AKZOY) North American architectural coatings business.
However, PPG Industries may continue to face softness in Europe with weak economic activity and a still challenging demand environment. Moreover, it remains exposed to raw material cost pressure and sluggishness across some of its key end markets.
PPG Industries is a Zacks Rank #2 (Buy) stock.
Other companies in the chemical industry with favorable Zacks Rank include Methanex Corporation (MEOH) and The Dow Chemical Company (DOW). While Methanex holds a Zacks Rank #1 (Strong Buy), Dow carries a Zacks Rank #2 (Buy).
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