Last year at this time The Sherwin-Williams Co. seemed to be almost basking in the glow of a seemingly auspicious pending transaction.  Half a year earlier, the company announced its agreement to acquire Comex, the paint giant based in Mexico City.  As one might expect, this Mexican-based behemoth had holdings that ranged from Canada to its home base, but is also a key player in Latin America.

Like Sherwin-Williams, Comex is both a leading manufacturer and purveyor of architectural and industrial coatings.  Sherwin-Williams was in large part attracted to the acquisition due to its perception of the similarities between the two companies as offering time tested quality products through cleverly concocted retailing and distribution networks.

Conex, already a giant in its native Mexico, came to prominence in the United States in 2004 when it acquired Professional Paint Inc. (PPI), of Lone Tree, CO.  At the time PPI’s holdings included several manufacturing facilities plus regional retail paint chains primarily covering the Western US and Canada.

Last September Sherwin-Williams announced that it had completed the part of the Comex acquisition that included all US and Canadian operations.  The Mexican end of the deal however faced legal barriers, many of which were to be expected with such a grand international deal.

In November 2013, it became clear that the enormous Mexican part of the deal was meeting possibly insurmountable obstacles from Mexico’s Comisión Federal de Competencia Económica (CFECO).  Translated, this is the Federal Economic Competition Commission (FECC) in Mexico, a state agency somewhat akin to our Federal Trade Commission.  Ultimately CFECO voted the deal down twice.  The commission noted that the consummation of the transaction would result in a US giant purchasing the largest paint company in Mexico, which could diminish the ability of smaller companies to compete.  After a series of appeals Sherwin-Williams decided to abandon its Mexican acquisition.

The US/Canadian aspect of the deal had been approved by all involved government agencies and cost Sherwin-Williams approximately $165 million.  However the truly anticipated gem of the deal, which would have gained Sherwin-Williams cache and entry into Mexico and well beyond its southern border, was lost.  That part of the deal would have cost an estimated $2.3 billion, in an all cash deal.

Sherwin-Williams has been regularly expanding for years through acquisitions of well-run American companies and popular regional retail chains.  The Comex acquisition focused on a seemingly natural international expansion, with considerable possibilities for the growth of its brand and of course its wealth, ultimately throughout Latin America.

Years ago, while attending a national trade show in Mexico, I visited several hardware stores with the editor and lead writer of a sister publication.  We were most impressed by the enthusiasm exhibited both by customers and the store owners of Ace affiliates, when they spoke of their love of Ace paints.  Store owners and managers noted that in Mexico Ace was seen more as a luxury brand than as a private label, due to its association with a national American company.  Imagine the potential impact of a successful Sherwin-Williams landing in Mexico and eventually south of its border.