PPG to sell architectural coatings business in U.S., Canada for $550M to AIP

PPG announced that it has reached a definitive agreement to sell 100% of its architectural coatings business in the U.S. and Canada at a transaction value of $550M to American Industrial Partners, or AIP, an industrials investor. The transaction, which is expected to close in late 2024 or early 2025, subject to customary closing conditions, is the result of PPG‘s evaluation of strategic alternatives for the business, which was first announced on February 26. Net cash paid to PPG at closing will include customary adjustments for working capital and net debt. The company also announced a cost reduction program with anticipated annualized pre-tax savings of approximately $175M once fully implemented, including savings of $60M in 2025. The multi-year program is focused on reducing structural costs primarily in Europe and in certain other global businesses, along with other corporate costs following the two recently announced agreements to sell PPG’s silicas products business and the architectural coatings business in the U.S. and Canada. The program includes various facility closures and other targeted fixed costs. The company will record a pre-tax charge of approximately $250M in the fourth quarter 2024, and other charges over the next several years when certain costs are incurred. In total, PPG expects the cost reduction program to impact about 1,800 positions, primarily in Europe and the U.S. The architectural coatings business in the U.S. and Canada represented approximately $2B of PPG’s 2023 total net sales, with low-single-digit EBITDA margin. As previously stated, on a three-year pro forma basis PPG’s overall company sales volume results would have improved cumulatively by over 200 basis points excluding this business. Also, the company’s Performance Coatings segment operating income, excluding the U.S. and Canada architectural coatings EBIT and the associated growth-related investments we have made, would have resulted in an approximately 300-basis point improvement in segment margins in 2023.