By Cameron Chai
PPG Industries, a coatings and specialty products company, has signed definitive agreements to split its commodity chemicals business and merge it with Georgia Gulf, an integrated North American manufacturer of chlorovinyls and aromatics and producer of vinyl-based building and home improvement products.
The combination of businesses creates an integrated chemicals and building products company with a wide range of downstream products. The merged entity is expected to have approximately $5 billion in annual revenues.
The transaction is anticipated to be completed in late 2012 or early 2013. The newly merged company will become the third largest producer of chlor-alkali and second largest producer of vinyl chloride monomer in North America.
E. Bunch, Chairman and CEO of PPG, stated that the deal helps to continue their strategic transformation into a leading coatings and specialty products company. It also reinforces the company’s strong cash position and offers an opportunity to augment the cash deployed for earnings-accretive initiatives, such as PPG share repurchases, debt repayment, organic growth initiatives and acquisitions.
Paul Carrico, President and CEO of Georgia Gulf, commented that the current transaction is an ideal fit for the company as it delivers remarkable value for all their stakeholders. The merged company will benefit from considerable integration, a wide range of downstream products, and low-cost natural gas in North America, concluded Carrico.