Moody’s lowers Valspar to Baa3

Moody's Investors Service said it downgraded Valspar Corp.’s long-term debt ratings to Baa3 from Baa2 due to its acquisition by Sherwin-Williams Co. (Baa3 stable) on June 1.

The agency also withdrew Valspar's commercial paper rating and its shelf registration.

This concludes the review for downgrade that was initiated on March 21, 2016 after Sherwin-Williams announced its bid for Valspar.

On June 1, Sherwin-Williams also announced the results of their exchange offer and consent solicitation for Valspar's outstanding debt, which will leave less than $72 million of debt at Valspar.

The ratings on Valspar's debt will be withdrawn as there will be insufficient financial information to maintain a rating.

The outlook is stable.

“The downgrade of Valspar's debt by only one notch to Baa3 reflects the lack of debt remaining at Valspar subsequent to the completion of the exchange offer and the underlying credit quality of its parent Sherwin-Williams,” Moody’s said in a news release.

“Moody's estimates that Sherwin-Williams leverage will increase to 4.5x pro forma for the acquisition of Valspar before synergies (4.2x including $280 million of synergies that the company expects to generate over the next three years).”

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