PPG (NYSE: PPG), a global leader in paints, coatings, and specialty materials, announced today that it has entered into a definitive agreement to sell 100% of its architectural coatings business in the U.S. and Canada to American Industrial Partners (AIP) for $550 million.
The transaction is expected to close in late 2024 or early 2025, pending customary closing conditions. It follows PPG's strategic review of the business, first announced on February 26, 2024. Upon closing, PPG will receive net cash payments, subject to adjustments for working capital and net debt. Goldman Sachs & Co. LLC acted as the exclusive financial advisor, while Hogan Lovells U.S. LLP served as PPG's legal advisor.
Additionally, PPG unveiled a comprehensive cost reduction plan, expected to generate annual pre-tax savings of approximately $175 million, with $60 million in savings projected for 2025. The program targets structural cost reductions, particularly in Europe and select global businesses, as well as corporate costs. This follows PPG's divestitures of both its silicas products business and U.S. and Canada architectural coatings business. The company anticipates reducing around 1,800 positions, primarily in Europe and the U.S., with a pre-tax charge of $250 million expected in Q4 2024, along with other charges over the coming years.
PPG CEO Tim Knavish expressed satisfaction with the agreement and emphasized the business's strong momentum and dedicated workforce. He added that the sale, along with the divestiture of the silicas business, aligns with PPG’s portfolio optimization strategy, allowing the company to enhance its growth and financial performance.
The architectural coatings business in the U.S. and Canada generated approximately $2 billion in net sales in 2023, with a low single-digit EBITDA margin. The sale is expected to improve PPG's organic growth and segment margins by hundreds of basis points on a pro forma basis. PPG's architectural coatings businesses in Latin America, Europe, and Asia Pacific remain core to its portfolio.
Source: PPG
