PPG, a global leader in paints, coatings, and specialty materials, has announced a definitive agreement to sell its architectural coatings business in the U.S. and Canada to American Industrial Partners (AIP) for a transaction value of $550 million. The deal is expected to close in late 2024 or early 2025, pending customary closing conditions. At closing, PPG will receive net cash, adjusted for working capital and net debt. Goldman Sachs & Co. LLC acted as PPG’s exclusive financial advisor, while Hogan Lovells U.S. LLP served as its legal advisor.
In addition to the sale, PPG revealed a comprehensive cost reduction program expected to generate approximately $175 million in annualized pre-tax savings once fully implemented, including $60 million in 2025. This multi-year initiative focuses on reducing structural costs primarily in Europe and other global operations, as well as corporate expenses, following the recent agreements to sell both the silicas products business and the architectural coatings business in the U.S. and Canada. The program involves facility closures and targeted fixed cost reductions. PPG anticipates a pre-tax charge of about $250 million in the fourth quarter of 2024, with additional charges occurring over the coming years as costs are incurred. Overall, this program is expected to affect approximately 1,800 positions, mainly in Europe and the U.S.
“We are pleased to reach an agreement with American Industrial Partners and believe the business is well positioned to leverage its current positive momentum, strong brands, proven innovation, established customers, and dedicated employees,” said Tim Knavish, PPG’s chairman and chief executive officer. “I want to express my gratitude to the architectural coatings employees in the U.S. and Canada for their dedication in delivering quality products and services to meet our customers’ evolving needs.”
Knavish added, “From PPG’s perspective, this transaction, along with the pending sale of our silicas products business, reflects our active portfolio management approach. These divestitures will further optimize our portfolio, enhancing our organic growth and financial returns, allowing us to better allocate resources to areas where we have the strongest competitive advantage.”
The architectural coatings business in the U.S. and Canada accounted for approximately $2 billion of PPG’s total net sales in 2023, with a low-single-digit EBITDA margin. Excluding this business, PPG’s overall sales volume results would have improved cumulatively by over 200 basis points on a three-year pro forma basis. Additionally, the operating income (EBIT) for PPG’s Performance Coatings segment, excluding the U.S. and Canada architectural coatings EBIT and related growth investments, would have seen an improvement of around 300 basis points in segment margins for 2023.
