PPG Industries Inc.
) announced that it has received a favorable private letter
ruling from the U.S. Internal Revenue Service (IRS) related to
the previously announced divestment of its commodity chemicals
business. In July 2012, PPG announced its intention to separate
its commodity chemicals business and merge the same with Georgia
Gulf Corporation or a Georgia Gulf subsidiary in a Reverse Morris
Trust transaction. This business combination is expected to
deliver enhanced value for the shareholders of both the
The deal value of roughly $2.1 billion includes $95 million of
debt. Per the deal, the merged company's shareholders will
receive 50.5% of the shares of the merged entity while Georgia
Gulf shareholders will own the balance.
The receipt of the private letter ruling is a closing condition
of the transaction with Georgia Gulf and an important objective
for the completion of the transaction. As a result of this, PPG
will commence its exchange offer and the merger is expected to
close in late January 2013.
In October 2012, PPG released its third quarter 2012 earnings.
The company posted earnings of $2.24 a share for the quarter
(excluding one-time charges), beating the Zacks Consensus
Estimate by 3 cents. The adjusted earnings excluded charges of $9
million associated with the company's move to divest its
commodity chemicals business. Profit (as reported) rose 9% year
over year to $339 million or $2.18 a share in the third quarter
of 2012, aided by the company's cost containment measures.
Revenue edged down 0.1% year over year to $3,845 million,
missing the Zacks Consensus Estimate of $3,904 million. Sales
were adversely impacted by unfavorable currency translation. PPG
saw mixed results across its end markets while its North American
automotive original equipment manufacturer (OEM) coatings
business recorded strong growth in the quarter.
PPG Industries, which competes with the DuPont Performance
Coatings segment of
E.I. DuPont de Nemours & Co.
), currently retains a short-term Zacks #3 Rank (Hold). We
currently have a long-term Neutral recommendation on the stock.
DU PONT (EI) DE (DD): Free Stock Analysis
PPG INDS INC (PPG): Free Stock Analysis
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