PPG, a global supplier of paints, coatings, and speciality materials, has agreed to divest its architectural coatings business in the US and Canada.
The segment, valued at $550m, will be acquired by American Industrial Partners, a company specialising in industrial investments.
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The expected completion of the sale is set for late 2024 or early 2025, pending customary closing conditions.
The decision to sell comes after PPG’s strategic review of its business, first announced on 26 February 2024.
PPG chair and chief executive officer Tim Knavish said: “From a PPG perspective, this transaction, along with the pending sale of our silicas products business, demonstrates the active portfolio management by the company and our board.
“These divestitures further optimise our portfolio by improving our organic growth and financial return profiles and will result in increased capability to channel our growth resources to areas where we have the strongest right to win with our customers.”
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By GlobalDataThe net cash received by PPG at closing will reflect standard adjustments for working capital and net debt.
Goldman Sachs has served as the exclusive financial advisor to PPG on the deal, with Hogan Lovells US providing legal counsel.
In conjunction with the sale, PPG has unveiled a comprehensive cost reduction programme, aiming for annualised pretax savings of approximately $175m once fully realised. This includes $60m in savings for the year 2025.
The programme, which will span multiple years, targets structural cost reductions primarily in Europe and some global operations, as well as corporate expenses.
The cost-cutting measures will involve facility closures and reductions in other fixed costs.
PPG anticipates recording a pr-tax charge of around $250m in the fourth quarter of 2024, with additional charges expected over the subsequent years as specific costs are incurred.
The company estimates that approximately 1,800 positions will be affected, mainly in Europe and the US.
The architectural coatings segment in the US and Canada accounted for roughly $2bn of PPG’s total net sales in 2023, with a low-single-digit earnings before interest, taxes, depreciation, and amortisation margin.
PPG’s architectural coatings operations in other parts of the world such as South America, Europe, and Asia-Pacific, where the company holds leading market positions, will continue to be integral to PPG’s portfolio.
