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Looking at the current situation of the U.S. industry from the mergers and acquisitions of the U.S. paint industry in 2005

looking at the current situation of the U.S. industry from the mergers and acquisitions of the U.S. paint industry in 2005

February 23, 2006

the market mergers and acquisitions of the U.S. paint industry in 2005 were relatively calm. According to the records of Einhorn associates, there were 13 kinds of paint transactions in the U.S. industry, both lower than 16 in 2003 and 21 in 2004. In essence, the reduction of mergers and acquisitions is due to the reduction of enterprises worthy of investment and acquisition in the industry. At the same time, the surge in raw material costs and the uncertainty of the future market also make buyers cautious about mergers and acquisitions with many and complex demands. If the situation is expected to remain unchanged in 2006, the number of mergers and acquisitions will continue to decline

in 2005, most M & A and acquisition cases occurred in medium-sized enterprises. Valspar completed a fairly profitable acquisition in 2005, which also marked the end of Samuel Cabot, a family owned enterprise. Samuel Cabot is a family owned private enterprise specializing in the production of high-quality interior and exterior coatings and paints. At the same time, Valspar sold its paint business in Iowa to PPG. This acquisition increased the product line of Valspar and obtained the sales management right of SKU brand, which expanded the sales customer base. PPG's acquisition of the paint business in Valspar, Iowa, marks a significant increase in PPG's service capacity to contractors using the company's products in the Midwest of the United States

the acquisition of technology enterprises has always been a means for rpm to expand its scale. In 2005, RPM continued to acquire and successfully acquired two enterprises. In June, it acquired ad fire fire fire system business for us $16million, and in July, it acquired okon business of rentech company. Adfire is a company that produces fireproof building materials. Its products are mainly water-based intumescent coatings and heavyweight bonded refractories. Okon's business is mainly water-based coating used for sealing of building materials. Joe Lee, manager of RPM development department, also admitted that "these two businesses are very attractive to rpm, but the purchase price is somewhat higher than reasonable."

the same technology category also includes the acquisition by Northwest coatings of actinic, an enterprise that produces UV tube curing coatings. The merger of the two enterprises will help improve product quality and strengthen product services

Gardner alpha was also active in the M & a market in 2005. In March, Gardner acquired fields company, a company that produces roof waterproof materials and waterproof coatings. This acquisition is conducive to expanding Gardner's business in the northwest of the United States. At the end of the year, Gardner made another move to acquire the roof repair business of armorflex, an independent company specializing in roof waterproofing business from Honeywell and Kold king

in 2005, American mergers and acquisitions also tended to acquire unique technological advantages, making it more developed in the buyer company. Examples include quest specialty's acquisition of foxcolor and its subsequent merger into quest production

Europe's eastern strategy

the calm of the U.S. M & a market is the same as that in Europe, but at this time, European enterprises have focused on the markets of Eastern Europe, Russia and China, because there are a large number of OEM enterprises in these places, and European enterprises are also consciously setting their businesses and enterprises in China, and directly influencing the United States through China and the Far East. As a result of this trend, raw material suppliers in the surrounding areas of the United States began to decrease

2006 forecast

we expect the U.S. paint business to recover in 2006. At the same time, we also believe that the cautious buyer market is mostly due to the stable development of many paint enterprises in the United States, and as investors, they cannot recover their investment in a short time. At the same time, the development of coating and paint depends on the courage to take the lead in its downstream production. The main functions of the experimental machine are changing torque, digital display of angle, angle measurement using angular displacement sensor (photoelectric encoder), automatic correction of angular displacement of torque sensor, peak value maintenance, overload protection, stiffness calculation, result printing, data query and other functions, manual loading industry, such as construction For the demand of automobile and other industries,

we expect that during 2006, the oil can realize data transmission, and the paint industry will recover the margin it lost in 2005. We believe that buyers remain cautious about offtake because the market is slowly growing for most coating segments and buyers are very concerned about the return of excessive returns on investment and potential. The demand and growth of quality paint firms and/or technology will continue. For paint companies with small scale and difficult to make profits, they will find that the possibility of obtaining investment will be smaller and smaller in 2006. 2005 was a bleak year for the paint industry, but as the saying goes, "we can learn a lot from prosperity, and in turn, we can learn a lot from adversity“