PPG Completes Spraylat Buyout

PPG Industries Inc. (PPG - Analyst Report) announced that it has completed its previously announced acquisition of certain assets of industrial coatings company, Spraylat Corp. The financial terms of the deal remained undisclosed.

PPG announced the acquisition of Spraylat in October this year. The privately held Spraylat is based in Pelham, New York. Spraylat has annual sales of about $125 million. Its industrial liquid and powder coatings products are supplied to automotive, transportation and architecture industries.

The acquisition will enhance the portfolio of PPG’s industrial coatings business for both liquid and powder coatings. Moreover, the company’s presence in key end-use markets, such as automotive parts, will also be strengthened due to the acquisition.

Spraylat has a strong presence in the industrial markets, such as automotive parts, architectural powder coatings, transportation, and general industrial niches, including mirror, electronic device, metal office furniture and storage, and sign coatings. The expertise of both the companies will create significant job opportunities going forward.

Recently, PPG also announced that it has struck a deal with AkzoNobel, N.V., Amsterdam to buy the latter’s North American decorative paint business for $1.05 billion. The deal has been approved by the board of directors of both the companies. It is expected to close early in the second quarter of 2013.

In October 2012, PPG released its third quarter 2012 earnings. The company posted earnings of $2.24 a share for the quarter (excluding one-time charges), beating the Zacks Consensus Estimate by 3 cents. The adjusted earnings excluded charges of $9 million associated with the company’s move to divest its commodity chemicals business. Profit (as reported) rose 9% year over year to $339 million or $2.18 a share in the third quarter of 2012, aided by the company’s cost containment measures.

Revenue edged down 0.1% year over year to $3,845 million, missing the Zacks Consensus Estimate of $3,904 million. Sales were adversely impacted by unfavorable currency translation. PPG Industries saw mixed results across its end markets while its North American automotive original equipment manufacturer (OEM) coatings business recorded strong growth in the quarter.

PPG Industries, which competes with the DuPont Performance Coatings segment of EI DuPont de Nemours & Co. (DD - Analyst Report), retains a short-term Zacks #3 Rank (Hold). We currently have a long-term Neutral recommendation on the stock.