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.
The merger, originally announced in March 2016, will create a powerhouse paint and coatings firm with $15.9 billion in combined revenue and 58,000 global employees. Valspar will become a wholly owned subsidiary of Sherwin-Williams, according to Wednesday’s report.
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.
Valspar and its Minnesota Linseed Oil Co. predecessor have been based in Minneapolis since 1903. The present company known as Valspar was founded in 1806 in Boston under the name Paint and Color.
The company’s stock closed Wednesday at $111.52, down 23 cents.