Higher expenses, severance packages eat into Valspar profit

In its waning days as an independent company, Valspar Corp. reported quarterly earnings reflecting the challenges that partly led to a merger agreement with rival Sherwin-Williams.

Compared with the same period a year ago, sales rose 2.5 percent to $907.7 million for the quarter ended Jan. 27, but profits fell 22 percent to $40.7 million, or 50 cents a share, the company said Wednesday.

Eating into profits were higher costs for research and product ingredients as well as employee severance packages connected with the sale.

Provided final regulatory approval is received as expected, the $11.3 billion deal with Cleveland-based Sherwin-Williams — worth $113 per common share — is expected to close by the end of April.

In January, Sherwin-Williams announced that it expected to negotiate the division divestitures required by the SEC in order for the acquisition to be approved.

Details have not been announced.

The original merger agreement allowed for divestitures worth up to $650 million in applicable revenue.

Company officials said more details will be made public as time, approvals and plans progress.

What is known is that Minneapolis will lose Valspar's corporate headquarters.

However, some operations are expected to stay, including recently renovated research labs that sit next to the corporate offices, city officials have said.

Corporate employees affected by the merger already have started to find employment elsewhere.

As of one year ago, Valspar had 10,500 employees in 25 countries, including about 600 in Minneapolis.

The company's stock closed Wednesday at $111.52, down 23 cents.