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PPG Agrees to Sell Remaining Fiberglass Operations to Nippon

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PPG IndustriesPPG declared that it has reached a definitive agreement to sell the remaining fiberglass operations to Nippon Electric Glass Co. Ltd. ("NEG"), a leading fiberglass maker. The transaction, which is subject to customary closing conditions, is expected to close in the second half of 2017. Pre-tax proceeds from the divestiture are expected to be around $545 million, subject to closing adjustments.

PPG Industries' remaining fiberglass operations include manufacturing plants in Chester, SC, and Lexington and Shelby, NC; and administrative and research-and-development operations in Shelby and in Harmar, PA.

PPG Industries completed the sale of its European fiberglass operations to NEG and divested its ownership interests in two Asian fiberglass joint ventures in 2016. It also wrapped up the sale of its North American flat glass business last year.

According to the company, this transaction will mark the end of PPG's history as a manufacturer of fiberglass. The deal serves as the final step in divesting PPG's non-core businesses and will channelize the company's focus on paints, coatings and specialty materials businesses.

PPG Industries has outperformed the Zacks categorized Chemicals-Diversified industry over the l ast six months. The company's shares have gained around 12.6% over this period, compared with roughly 7.2% gain recorded by the industry.

The company has a diversified business, both in terms of products offered and geographical presence. The company's strong presence in emerging regions has enabled it to deliver growth to shareholders by tapping opportunities there. PPG Industries is also taking initiatives to expand its business through acquisitions.

PPG Industries has announced certain restructuring measures to lower its cost structure globally. Special emphasis will be put on regions and end-use markets with the weakest business. The restructuring actions are expected to deliver $120-$130 million in annual savings, with $40-$50 million of savings expected to be realized in 2017.

The company also has an impressive record of returning cash to shareholders through dividends and share buybacks. PPG Industries expects to deploy $2.5-$3.5 billion cash in acquisitions and share repurchases for 2017 and 2018 combined.

PPG Industries is however, exposed to unfavorable currency exchange translation. The company also continues to face macroeconomic challenges. It sees moderate growth in emerging economies in 2017. The company's operating results are also exposed to the cost of raw materials and energy.

PPG Industries, Inc. Price and Consensus

PPG Industries, Inc. Price and Consensus | PPG Industries, Inc. Quote

Zacks Rank & Key Picks

PPG Industries currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the chemical space include BASF SE BASFY , The Chemours Company CC and Kronos Worldwide Inc KRO . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

BASF has expected long-term growth of 8.6%.

Chemours has expected long-term growth of 15.5%.

Kronos has expected long-term growth of 5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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