PPG INDUSTRIES has signed an agreement to sell its fine chemicals operation for $65 million to ZaCh Systems, the fine chemicals subsidiary of Italian pharmaceuticals firm Zambon. The deal comes just a few days after PPG revealed it would sell its automotive glass business for $500 million to private equity firm Platinum Equity. Both businesses had been on the block for some time.
Cash raised in the two sales will help the company pay for its pending purchase of the Dutch coatings maker SigmaKalon Group from private equity firm Bain Capital. That deal will cost PPG more than $3 billion, including assumed debt, and enlarge its coatings operations by 40%.
PPG CEO Charles E. Bunch says the fine chemicals agreement "is yet another step toward achieving PPG's vision of continuing to be the leading coatings and specialty products and services company." Following the announcement in May of first-quarter results, he told investors that more than 80% of the company's earnings are from coatings and specialty products such as optical products and silicas.
The sale of automotive glass removes an underperforming business from PPG's portfolio, writes P. J. Juvekar, an analyst with investment firm Citigroup, in a report to clients.
The sale to ZaCh Systems includes fine chemicals facilities in LaPorte, Texas, and Avrille, France. PPG will continue to operate a phosgene derivatives plant in LaPorte. It expects to complete the sale during the fourth quarter of this year, subject to regulatory approvals. Gianni Marini, ZaCh Systems chairman, says the business, which employs about 360 people, will reinforce his firm's custom synthesis business strategy and research competence.
Closing on the sale of the automotive glass business, which employs 4,400 people at more than 18 facilities in North America, is also expected in the fourth quarter, subject to government approvals.