PITTSBURGH - PPG Industries (NYSE: NYSE:PPG (WA:IBSP)), a global supplier of paints, coatings, and specialty materials with a market capitalization of $28.93 billion, has finalized the sale of its architectural coatings business in the United States and Canada. The deal, valued at $550 million, was completed with American Industrial Partners (AIP), a firm known for its focus on industrial businesses. According to InvestingPro data, PPG maintains a GOOD financial health score, reflecting its strong market position.
The divested business, which contributed approximately $2 billion to PPG's 2023 total net sales of $18.03 billion, includes a range of well-known brands such as Glidden, Olympic, and Dulux in Canada. This segment had been delivering a low-single-digit EBITDA margin, significantly below the company's overall gross profit margin of 42.7%.
Tim Knavish, PPG's chairman and CEO, expressed gratitude to the employees for their dedication and stated that this divestiture, along with the previously completed sale of their silicas products business, positions PPG for improved organic growth and financial returns. Knavish highlighted that the move enables PPG to better allocate resources to areas with the highest growth potential.
The transaction is a strategic shift for PPG, following a review process that commenced on February 26, 2024. This sale is expected to have a positive impact on the company's financials, as indicated by a pro forma analysis showing a cumulative improvement of over 200 basis points in sales volume and a 300-basis point increase in Performance Coatings segment margins for 2023, excluding the now-sold business.
The deal includes the transfer of various manufacturing and distribution facilities across the U.S. and Canada, as well as over 15,000 points of sale, including company-owned stores, independent dealers, and major retail locations.
AIP, with around $16 billion in assets under management, is set to take over the business, adding to its portfolio of industrial companies that collectively generate about $25 billion in annual revenues and employ roughly 70,000 people.
PPG, meanwhile, continues to operate its architectural coatings businesses in other regions, maintaining strong positions in Latin America, Europe, and Asia Pacific.
Goldman Sachs & Co. LLC and Hogan Lovells U.S. LLP served as financial and legal advisors, respectively, to PPG for this transaction. This news is based on a press release statement from PPG.
In other recent news, PPG Industries has made significant strides in leadership transitions and business restructuring. The company announced a leadership reshuffle in its coatings unit, with Juliane Hefel taking on the role of Senior Vice President of Industrial Coatings and Xiaobing Nie expanding her leadership duties to cover all of Asia Pacific for industrial coatings. PPG has also reported Q3 sales of $4.6 billion, a 3% increase from the previous year, and plans to sell its Global Silicas products business for $310 million and its Architectural Coatings US and Canada business for $550 million.
Analysts from RBC Capital Markets and BMO Capital Markets have adjusted their price targets for PPG Industries due to challenges in the automotive and industrial sectors, with RBC lowering its target to $136.00 and BMO reducing its target to $155. The company disclosed the retirement of Senior Vice President, Operations, Ramaprasad Vadlamannati, who will transition to an unpaid leave of absence throughout 2025, with a separation agreement that includes a $102,000 payment. These recent developments indicate PPG's ongoing strategy to strengthen its global industrial coatings business and its focus on portfolio optimization.
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