PPG Industries has signed an agreement with an affiliate of funds managed by Kohlberg & Company LLC, Mount Kisco, N.Y., under which PPG will divest its automotive glass and services business to a new company formed by Kohlberg.
PPG will receive $330 million in gross cash proceeds plus a minority ownership interest of approximately 40 percent in the new company, subject to closing adjustments. Net of payments to former minority interests, transaction fees, expenses and taxes, the transaction will result in approximately $270 million in cash to PPG.
“This transaction is another positive step forward in our portfolio transformation,” said Charles E. Bunch, PPG chairman and chief executive officer. “It enables us to focus more on coatings and specialty products, and significantly reduces PPG’s exposure to the U.S. automotive market.”
The company stated the net cash proceeds from the transaction will be utilized for general corporate purposes.
In accordance with generally-accepted accounting principles, the results of the automotive glass and services business were reported as discontinued operations beginning in September 2007 and, because PPG will hold an ownership interest in the newly formed company, it will reclassify the business into continuing operations in the company’s historical and current financial statements.
The automotive glass and services business supplies automotive OEM windshields, rear and side windows, sunroofs and assemblies for auto and truck manufacturers, and it supplies and distributes replacement automotive glass products for use in the aftermarket. It also provides insurance claim services through its LYNX Services subsidiary, glass management software through its GTS subsidiary, and e-business solutions through its GLAXIS division.
The business manufactures and fabricates automotive glass products in nine North American plants located in Berea, Ky.; Creighton, Meadville and Tipton, Pa.; Crestline, Ohio; Evansville, Ind.; Evart, Mich.; and Hawkesbury and Oshawa, Ont., Canada. In addition, there are nine satellite parts assembly plants, and there are LYNX Services claims management centers in Fort Myers, Fla., and Paducah, Ky. Combined, the businesses employ approximately 4,400 people.