Sherwin-Williams (SHW) and Valspar (VAL) announced Sunday they have entered into a definitive agreement under which SHW will acquire Valspar for $113 per share in an all-cash transaction, representing an enterprise value of approximately $11.3B. The transaction, which has been unanimously approved by the boards of directors of both companies, represents a premium of approximately 41% to Valspar’s volume weighted average price for the 30 days up to and including March 18. “Sherwin-Williams and Valspar have highly complementary paints and coatings offerings…

The transaction results in an exceptional, diversified array of strong brands and technologies, accelerates Sherwin-Williams growth strategy by expanding its global platform in Asia-Pacific and EMEA, and also adds new capabilities in the packaging and coil segments,” said the companies. The combined company would have pro forma 2015 revenues and adjusted EBITDA, including estimated annual synergies, of approximately $15.6B and $2.8B, respectively. “Sherwin-Williams will continue to be headquartered in Cleveland and we intend to maintain a significant presence in Minneapolis…

We are highly confident in the industrial logic of the transaction and, once closed, our ability to achieve $280M of estimated annual synergies in the areas of sourcing, SG&A and process and efficiency savings within two years and our long-term annual synergy target of $320M. We expect this transaction to be immediately accretive excluding one-time costs and meaningfully enhance our cash flow generation profile,” said Sherwin-Williams CEO John Morikis. “We are confident this transaction will create opportunities to accelerate many of the operating initiatives already underway at Valspar,” noted Valspar CEO Gary Hendrickson. The transaction is expected to close by the end of Q1 calendar year 2017.

Both companies said they believe the combination will receive all necessary regulatory clearances. Sherwin-Williams and Valspar believe that no or minimal divestitures should be required to complete the transaction. Under the terms of the merger agreement, in what both companies believe to be the unlikely event that divestitures are required of businesses totaling more than $650M of Valspar’s 2015 revenues, the transaction price would be adjusted to $105 in cash per Valspar share. Sherwin-Williams would have the right to terminate the transaction in the event that required divestitures exceed $1.5B in 2015 revenues. Sherwin-Williams has obtained committed bridge financing from Citigroup Global Markets in support of the transaction and is “committed to maintaining its current dividend and rapid deleveraging using significant free cash flow.”