Chase Manhattan Corp. has won the mandate to lead a $1.4 billion loan for Sherwin Williams Co.'s $830 million acquisition of Thompson Minwax Holding Corp., said market sources.
The loan will back the acquisition of Thompson from buyout firm Forstmann Little & Co. and will refinance about $600 million of debt arranged by BankAmerica Corp.
Chase had contributed to earlier financings arranged for Sherwin Williams but had not been among the lead lenders. The New York-based bank, however, has had a long relationship with Forstmann Little and was able to maintain that role for the buyer.
Sherwin Williams has been an active acquirer in the rapidly consolidating paint business in the past year. The maker of paints and varnishes bought Pratt & Lambert United Inc. in January.
"The coating industry is a fragmented, but consolidating, industry," said Jim Potesky, an analyst at Standard & Poor's Ratings Group.
The rating analyst said the deal created some strategic synergies, but added that the new debt could increase the financial risk of the company. As a result, he put Sherwin's A-minus rated debt on negative credit watch.
In the past year, Forstmann Little sold Ziff Davis, and took Gulstream Aerospace public. It also bought Community Health Systems.
"In the last year or so, Forstmann has been largely a seller," said George Sard, a spokesman for the buyout firm.
Investment banks Smith Barney and Merrill Lynch advised the buyout firm, which bought Thompson Minwax in 1994.
