MEXICO CITY, July 18 Mexico's competition
watchdog said it had denied U.S. paint maker Sherwin Williams
Co's $2.34 billion purchase of Mexican paint company
Consorcio Comex due to concerns it could create unfair market
The federal competition commission (Cofeco) said it feared
the tie-up would create a company with a large part of the local
market for decorative paint, potentially impeding competition.
Sherwin Williams announced the deal in November last year,
saying it would help it increase its presence in markets such as
Mexico, the U.S. West Coast and Canada, where its store count is
Cofeco said its analysis showed the tie-up would create a
company with between 48 and 58 percent of the decorative paint
market and that would be six to 10 times bigger than its closest
The companies will be able to appeal the decision with
"We are disappointed by this decision, but remain hopeful
that we can adequately address the Commission's objections and
proceed with the transaction," said Sherwin Williams Chief
Executive Christopher Connor in a statement.
Sherwin Williams, which reported slightly
weaker-than-expected second-quarter results earlier on Thursday,
said it would discuss the decision in more detail on a call with
analysts later in the morning.
Comex is a family-owned company that was founded in the
1950s. It has more than 3,000 outlets in Mexico, compared to
Sherwin Williams' 135 stores.
The purchase price for Comex, which generated sales of about
$1.4 billion in 2011, includes debt held by the company.