PPG: Strategic Review of US and Canada Architectural Business Does Not Change Our Long-Term Thesis

Narrow-moat-rated PPG announced on Feb. 26 that it will review strategic alternatives for its US and Canada architectural coatings business. This business accounted for roughly 10% of sales in 2023 and includes some of PPG’s most recognized architectural brands like Glidden and Olympic. Management said the review could result in a multitude of outcomes, including no action at all. A sale, spinoff, joint venture, or other alternatives remain on the table. While it’s unclear if PPG would receive regulatory approval to sell its architectural business to a North American competitor, other options could prevent potential regulatory issues. We are maintaining our $117 fair value estimate for the shares for now. We will revisit our valuation assumptions once details of any deal are disclosed.