PPG has entered into a definitive agreement to sell its North American architectural coatings business, with a cost-cutting plan that is expected to affect 1,800 jobs

On October 17, PPG announced that it had reached a definitive agreement to sell 100% of its architectural coatings business in the U.S. and Canada to industrial investor American Industrial Partners (AIP) for $550 million.

The transaction is expected to close by the end of 2024 or early 2025, subject to customary closing conditions. This is the result of PPG's evaluation of strategic alternatives to the business, which was first published on February 26, 2024. The net cash payable to PPG at closing will include customary adjustments to working capital and net debt. Goldman Sachs & Co. LLC served as exclusive financial advisor and Hogan Lovells U.S. LLP served as legal advisor.

PPG also announced a comprehensive cost-cutting program that is expected to save approximately $175 million annually in pre-tax costs, including $60 million in savings by 2025. The multi-year program is focused on reducing structural costs primarily in Europe and certain other global operations, as well as other corporate costs following the recently announced sale of PPG's silica products business and architectural coatings business in the U.S. and Canada. The plan includes the closure of various facilities and other targeted fixed costs. The company will record approximately $250 million in pre-tax charges in the fourth quarter of 2024 and other charges as certain costs become incurred in future years. Overall, PPG expects the cost-cutting program to affect about 1,800 jobs, primarily in Europe and the United States.

"We are pleased to have entered into an agreement with American Industrial Partners and believe the company is well positioned to capitalize on its current positive momentum, leading brands, proven innovation, proven customers, and dedicated and talented employees," said Tim Knavish, Chairman and CEO of PPG. I would like to thank the employees of the architectural coatings business in the U.S. and Canada for their dedication and commitment over the years to provide quality products and services that meet the changing needs of our customers. ”

"From PPG's perspective, this transaction, along with our upcoming sale of the silica products business, demonstrates the active portfolio management of the Company and the Board. These divestitures further optimize our portfolio by improving our organic growth and financial return profile. ”

"In addition, we are taking decisive self-help actions to reduce our overall cost structure. While these decisions were tough, they were necessary to adjust our fixed cost base and company size following the divestiture of these two businesses. None of these actions will affect our ongoing investments or focus on organic growth. ”

PPG's architectural coatings business in the U.S. and Canada, part of the company's Performance Coatings division, is a leader in the residential and commercial architectural coatings industry, with a portfolio of well-known brands including GLIDDEN®, OLYMPIC®, LIQUID NAILS,® HOMAX®, PITTSBURGH PAINTS & STAINS®, Manor Hall®, FLOOD®, DULUX® (in Canada) and SICO®, among others. The business manufactures and sells interior and exterior paints, colorants, caulks, repair products, adhesives, and sealants for homeowners and professionals. It also includes certain light-duty protective coating products, which are primarily sold through PPG's own stores and manufactured through common facilities.

PPG's architectural coatings business in the U.S. and Canada is led by approximately 6,600 employees and manufactures and distributes products through dedicated facilities in multiple locations. The architectural coatings business includes approximately 750 company-owned stores in the United States (including Puerto Rico) and Canada. Its headquarters are located in Cranbury, Pennsylvania, which includes the leadership and management team of the business. The company also has offices in Vaughan, Ontario, Canada, and Boucheville, Quebec, which includes an additional management team.

The transaction primarily includes multiple architectural coatings manufacturing plants, distribution centers, and more than 15,000 points of sale (750 company-owned stores, 6,600 independent dealer locations, and 8,100 major home improvement centers and retail locations throughout the U.S., Canada, and Puerto Rico).

Source: PPG