CLEVELAND, MINNEAPOLIS, PHILADELPHIA - Citing concerns by the Federal Trade Commission and Canadian Competition Bureaus over the proposed acquisition of The Valspar Corp. by The Sherwin-Williams Co., the two companies said they have entered into an agreement to sell Valspar’s North American Industrial Wood Coatings business to Axalta Coating Systems for $420 million in cash. The announcement was made April 12.

Sherwin-Williams (NYSE: SHW) announced last month it would purchase paint and coatings rival Valspar (NYSE: VAL) in a deal worth approximately $11.3 billion. However, regulators made it clear that the union would face antitrust obstacles and that a division or asset divestiture would be required in order for the merger to proceed.

“With this agreement, we believe that we have addressed regulatory concerns appropriately and we are moving forward to obtain approval for our acquisition of Valspar,” said John G. Morikis, chairman, president and CEO of Sherwin-Williams, which is headquartered in Cleveland, Ohio. Originally expected to close by the end of the first quarter in 2017, the merger agreement between Sherwin-Williams and Valspar was extended to June 21, 2017.

“We believe that Axalta is an excellent buyer for our North American Industrial Wood Coatings business and will provide great opportunities for our talented employees," said Gary E. Hendrickson, Valspar chairman and CEO,  "Axalta is a strong cultural fit with Valspar and shares our commitment to innovation and customer service.  We will work closely with Axalta to ensure a smooth transition of this business,” he added.

Headquartered in Minneapolis, Valspar’s North American Industrial Wood Coatings business had revenues of approximately $225 million in 2016. Its brands include Zenith®, Lustre Lac™ and Graintone™, with the finishes sold to OEM and wood products aftermarkets, including building products, cabinets, flooring and furniture.

“This is an outstanding opportunity for Axalta to enter the large Industrial Wood Coatings market with an industry-leading portfolio of products and customers,” said Axalta Chairman and CEO Charlie Shaver. “The strong reputation enjoyed by these brands among a long-term customer base will provide an excellent platform for future growth in this important market. Our shared commitment to technology and excellence in application services, as well as a strong pipeline of new products, will enable us to meet the needs of both current and new customers.

Axalta (NYSE: AXTA) said it intends to operate the business as a pure bolt-on. As part of the transaction, Axalta will acquire the personnel, both dedicated manufacturing sites, R&D assets and the underlying intellectual property of Valspar’s North American Industrial Wood Coatings business. "This acquisition continues to build on our strategy to strengthen and further diversify our Performance Coatings segment,” Shaver added.

Headquartered in Philadelphia, Axalta posted 2016 net sales of $4.1 billion.