PPG Industries Inc.
) announced that it has started the share exchange program, which
is a part of the deal to split off its Commodity Chemicals
business. The split off is related to the separation and merger
of Eagle Spinco Inc., a wholly-owned subsidiary of PPG, wherein
it will own all the assets and liabilities of PPG's commodity
chemicals business. Eagle Spinco is then expected to merge with a
Georgia Gulf Corporation
Under the terms of the exchange offer, PPG shareholders can
exercise the option of exchanging all, some or none of their
shares of PPG common stock with shares of Eagle Spinco. These
Eagle Spinco shares will then automatically convert to Georgia
Gulf shares once the merger is complete.
For every $1.00 of PPG common stock, a shareholder will receive
about $1.11 of Georgia Gulf stock. PPG said it currently expects
to issue approximately 35.24 million shares of Eagle Spinco
common stock in the exchange offer. The exact number of shares of
Eagle Spinco common stock to be issued will be equal to the
greater of 35.20 million or 1.02020202 times the number of shares
of Georgia Gulf common stock outstanding immediately prior to the
The number of shares of PPG common stock that will be accepted in
the exchange offer will depend on the final exchange ratio, the
number of shares of Eagle Spinco common stock offered and the
number of shares of PPG common stock tendered. PPG shareholders
will be allowed to exchange shares till 8 a.m. New York time on
January 28, 2013.
Few days back, PPG received a favorable private letter ruling
from the U.S. Internal Revenue Service (IRS) related to the
divestment of its commodity chemicals business. The receipt
of the private letter ruling was a closing condition and an
important objective for the completion of the transaction with
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
GEORGIA GULF (GGC): Free Stock Analysis
PPG INDS INC (PPG): Free Stock Analysis
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