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The Sherwin-Williams Company (NYSE: NYSE:SHW), a $89.57 billion market cap leader in the chemicals industry, announced today that it has entered into an agreement to purchase the decorative paints business of BASF S.A. in Brazil for $1.15 billion, subject to post-closing adjustments.
According to InvestingPro data, Sherwin-Williams maintains a GOOD financial health score and generated $23.1 billion in revenue over the last twelve months, positioning it well for this strategic expansion. This move comes as Sherwin-Williams’ subsidiary, Sherwin-Williams do Brasil Indústria e Comércio Ltda., signed the purchase agreement with BASF S.A. and BASF Coatings S.A., both subsidiaries of BASF SE (OTC:BASFY), on February 15, 2025.
The transaction, which involves the acquisition of all issued and outstanding equity interests in BASF Coatings S.A., is contingent upon the successful carve-out of BASF’s decorative paints business in Brazil. This process will entail transferring relevant assets, properties, contracts, permits, rights, and employees into the target company.
Completion of the deal is subject to customary closing conditions, including Brazilian antitrust approval and the completion of the carve-out. If the transaction does not close within 18 months from the date of the purchase agreement, either party may terminate the agreement.
Additionally, the agreement may be terminated if Brazilian antitrust approval is not obtained by the end date, with Sherwin-Williams required to pay an 8% termination fee in such an event. Sherwin-Williams also reserves the right to terminate the agreement if a material adverse effect occurs with respect to the target company or the business.
Both BASF and Sherwin-Williams will provide guarantees for the obligations of the seller and purchaser, respectively, under the purchase agreement and related transaction documents. The closing of the transaction is eagerly anticipated by both entities, as it represents a significant expansion of Sherwin-Williams’ operations in Brazil.
InvestingPro analysis reveals the company has maintained strong operational performance with a 48.47% gross profit margin and has been consistently profitable, though current valuations suggest the stock may be trading above its Fair Value. For deeper insights into Sherwin-Williams’ financials and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Investors and industry watchers will be closely monitoring the progress of this acquisition, which has the potential to reshape the competitive landscape of the decorative paints market in Brazil.
With 13 additional exclusive ProTips available on InvestingPro, including insights on dividend history and management’s capital allocation strategy, subscribers can gain a comprehensive understanding of Sherwin-Williams’ market position and future prospects. The information reported is based on a press release statement filed with the SEC.
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