Paints and coatings manufacturer PPG (Pittsburgh, Pennsylvania, USA) announced this week that it has completed the sale of its architectural coatings business in the United States and Canada at a transaction value of $550 million to American Industrial Partners (AIP), an industrials investor.
According to AIP, the business has been renamed The Pittsburgh Paints Company (Pittsburgh Paints Co.). The intent is to honor its mission and deep heritage of excellence and innovation in delivering architectural paint and stain products to commercial and residential customers.
As for PPG, the company notes that its architectural coatings businesses in other regions around the world remain core businesses within its portfolio. This includes the regions of Latin America, Europe, and Asia Pacific, where PPG says it holds strong No. 1 or No. 2 positions in many key countries.
“We are pleased to complete this transaction with American Industrial Partners, and I want to thank the architectural coatings’ U.S. and Canada employees for their dedication and commitment to the business and to PPG customers throughout the years,” says Tim Knavish, chairman and CEO of PPG.
“This transaction, along with the completed sale of our silicas products business, further optimizes 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,” Knavish adds
The U.S. and Canadian architectural coatings business represented approximately $2 billion of PPG’s 2023 total net sales, with low-single-digit EBITDA margin, according to the company. On a three-year pro forma basis, the manufacturer notes that its overall company sales volume results would have improved cumulatively by over 200 basis points, if excluding this business.
Furthermore, the company’s performance coatings segment operating (EBIT) income—excluding U.S. and Canadian architectural coatings EBIT and the associated growth-related investments—would have resulted in an approximately 300-basis point improvement in 2023 segment margins.
The transaction comes in the aftermath of an extensive evaluation of strategic business alternatives, as announced on February 26, 2024. Goldman Sachs & Co. LLC acted as PPG’s exclusive financial advisor, while Hogan Lovells U.S. LLP served as its legal advisor.
About the Recently Sold Business
PPG’s former architectural coatings business in the United States and Canada is described as an industry leader in residential and commercial architectural coatings through a portfolio of brands including GLIDDEN, OLYMPIC, LIQUID NAILS, HOMAX, PITTSBURGH PAINTS & STAINS, Manor Hall, FLOOD, DULUX (in Canada), and SICO, among others.
The business manufactures and sells interior and exterior paints, stains, caulks, repair products, adhesives, and sealants for homeowners and professionals. It also includes certain light-duty protective coatings products that are primarily sold through company-owned stores and manufactured through a common factory footprint.
The transaction included the following architectural coatings facilities. All are in the United States unless otherwise indicated:
- Manufacturing: East Point, Georgia; Oakwood, Georgia; Louisville, Kentucky; Huron, Ohio; Reno, Nevada; Carrollton, Texas; Temple, Texas; Delta, British Columbia (Canada); and Vaughan, Ontario (Canada).
- Distribution centers: Huron, Ohio; Oakwood, Georgia; Reno, Nevada; Aurora, Illinois; Flower Mound, Texas; Riverside, California; Reading, Pennsylvania; Carolina, Puerto Rico; Calgary, Alberta (Canada); Delta, British Columbia (Canada); Toronto, Ontario (Canada); and Moncton, New Brunswick (Canada).
- More than 15,000 points of sale, including 750 company-owned stores, 6,600 independent dealer locations, and 8,100 major home improvement centers and retailer locations across the United States, Canada and Puerto Rico.
- Leased headquarter offices for leadership and administrative teams located in Cranberry, Pennsylvania; Vaughan, Ontario (Canada); and Boucherville, Quebec (Canada).
About American Industrial Partners
American Industrial Partners (AIP) is an industrials investor, with approximately $16 billion in assets under management. AIP is distinctively focused on industrial businesses across a broad range of end markets such as aerospace and defense, automotive, building products, capital goods, chemicals, industrial services, industrial technology, logistics, metals and mining, and transportation.
AIP’s stated mission is to generate differentiated returns by investing in industrial businesses with strong management teams and working with those teams to implement comprehensive operating agendas to build long-term value. As of July 2024, current AIP portfolio companies generate aggregate annual revenues of approximately $25 billion and employ approximately 70,000 employees.
About PPG
PPG’s stated mission is to work every day to develop and deliver the paints, coatings, and specialty materials that its customers have trusted for more than 140 years. Through dedication and creativity, the group aims to solve the biggest challenges of its customers, all while collaborating closely to find the right path forward.
With headquarters in Pittsburgh, the manufacturer operates and innovates in more than 70 countries while reporting net sales of $18.2 billion in 2023. The company serves customers in construction, consumer products, industrial and transportation markets, and aftermarkets.
Source: PPG, www.ppg.com.