Sherwin-Williams ( SHW) has terminated its amended and restated stock purchase deal to buy the Mexico business of Consorcio Comex, S.A. de C.V. The U.S. paint giant said that it has sent a notice to the sellers regarding the termination.
Under the terms of the restated agreement dated Sep 16, 2013, either Sherwin-Williams or Comex had the right to end the deal if it did not consummate on or before Mar 31, 2014.
According to Sherwin-Williams, Comex has accused it for breaching its obligations under the stock purchase agreement by not using commercially reasonable efforts to close the deal. Sherwin-Williams, on Apr 3, filed a complaint in the New York Supreme Court, requesting the court to declare that it has not breached the agreement. The company will comment further on the matter in its first-quarter 2014 earnings call on Apr 17.
Sherwin-Williams’ shares fell 3.3% to close at $193.89 last Friday.
Sherwin-Williams, in Nov 2012, agreed to buy Comex for roughly $2.34 billion, including debt. The company, in Sep 2013, completed the acquisition of the U.S. and Canadian businesses of Comex for $90 million in cash and assumed liability of around $75 million.
However, Sherwin-Williams’ appeal related to the pending acquisition of Comex’s core Mexican business was denied and the acquisition was declared unauthorized by the Federal Economic Competition Commission (:FECC) in Mexico in Nov 2013.
Sherwin-Williams, last month, met with the FECC in Mexico to discuss the remedies required by the commission as a condition of regulatory approval related to the acquisition of Comex's business in Mexico.
The acquisition of Comex’s U.S. and Canadian businesses has ushered in significant opportunity for Sherwin-Williams. The acquisition is a strategic fit for the company and will enable it to better serve its customers across some of its key markets.
Sherwin-Williams, which is one of the leading paints companies along with PPG Industries Inc. ( PPG), currently holds a Zacks Rank #4 (Sell).