PPG Industries (NYSE: PPG) has entered into a definitive agreement to sell its US and Canada architectural coatings business to American Industrial Partners (AIP) for $550 million.
This move is part of PPG’s broader effort to streamline operations and focus on higher-margin segments, while AIP aims to leverage the acquisition to expand its portfolio of industrial businesses.
The deal is expected to close by early 2025, subject to regulatory approvals and customary closing conditions.
PPG, a global leader in paints, coatings, and specialty materials, had first hinted at exploring strategic alternatives for its architectural coatings business in February 2024.
The divestment represents a key step in PPG’s ongoing portfolio management, which includes the sale of its silica products business as well.
Tim Knavish, PPG’s chairman and CEO, emphasized the importance of this transaction, stating,
This divestiture aligns with our goal of improving organic growth and enhancing our financial returns while sharpening our focus on core businesses.
The architectural coatings business in the U.S. and Canada generated approximately $2 billion in sales in 2023 but delivered low single-digit EBITDA margins.
Despite these margins, the business holds significant brand strength, with well-known names such as GLIDDEN®, OLYMPIC®, and LIQUID NAILS® in its portfolio.
AIP is expected to capitalize on this brand equity and use its expertise in industries to drive further growth.
PPG’s sales include nine manufacturing plants and several distribution centers across North America, along with over 15,000 points of sale, including company-owned stores, independent dealer locations, and major home improvement centers.
The transition to AIP will also involve the relocation of leadership and administrative offices currently based in Cranberry, Pennsylvania, and Vaughan, Ontario.
PPG’s cost-cutting measures: elimination of 1,800 jobs
In tandem with the sale, PPG has announced a comprehensive cost-cutting initiative aimed at reducing structural costs, primarily in Europe and the US.
The plan includes the elimination of approximately 1,800 jobs and the closure of several facilities.
PPG expects this program to generate annualized pre-tax savings of around $175 million, with $60 million anticipated in 2025.
The company will incur a pre-tax charge of $250 million in the fourth quarter of 2024 related to the restructuring efforts.
PPG’s decision to downsize follows two major divestitures—its architectural coatings business in the US and Canada and its silicas products division—as the company seeks to optimize its portfolio for growth and profitability.
Knavish acknowledged the challenges posed by the restructuring but noted that these actions are necessary to “right-size” PPG’s cost base following the divestitures.
Despite the cutbacks, PPG assured stakeholders that its focus on innovation and organic growth in its core businesses remains unchanged.
American Industrial Partners manages $16B in assets
For American Industrial Partners, this acquisition represents a significant opportunity to strengthen its industrial portfolio.
AIP, which manages approximately $16 billion in assets, specializes in acquiring and growing industrial businesses across sectors such as aerospace, automotive, and building products.
The firm’s hands-on approach to operational improvement is expected to help PPG’s architectural coatings business thrive under new ownership.
With its extensive reach in North America and well-established customer base, AIP sees this acquisition as a key growth driver for its portfolio.
The transaction also reflects AIP’s broader strategy of investing in businesses with solid fundamentals and scaling them for long-term success.
By acquiring PPG’s architectural coatings business, AIP stands poised to make significant inroads in the competitive coatings industry, leveraging the division’s well-known brands and established distribution network to drive further market penetration.
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