Renewable Energy

PPG to keep architectural, industrial coatings units after review

Credit: REUTERS/JONATHAN BACHMAN

PPG Industries Inc said on Tuesday it decided to keep its architectural and industrial coatings units after reviewing its operations following calls from activist investor Nelson Peltz to break up the company.

Adds details on review, background on Trian's investment, share movement

May 21 (Reuters) - PPG Industries Inc PPG.N said on Tuesday it decided to keep its architectural and industrial coatings units after reviewing its operations following calls from activist investor Nelson Peltz to break up the company.

The U.S. painting and coatings company also said it was working on a plan to save about $125 million in the full year by pruning low profit businesses and exiting some smaller product lines.

Trian Fund Management LP, run by billionaire Peltz, dropped plans to challenge PPG's board at the annual meeting in April after the company met some of the hedge fund's demands and announced new financial targets, Reuters reported in January.

PPG had said then it would explore separating its architectural from its industrial coatings and announced sales growth target of 3% to 5% for the full year and a minimum 10% earnings-per-share growth as the standard for executive incentive compensation.

Trian is the sixth largest shareholder in the company and built its stake after a series of missteps by PPG including accounting irregularities and a failed $30 billion hostile bid for Dutch peer Akzo Nobel SA AKZO.AS in 2017.

The hedge fund, which cut its stake by 14.6% to about 6 million shares as of March 31, had also asked PPG to replace its Chief Executive Michael McGarry with former CEO Chuck Bunch and eliminate the company's practice of re-electing only a portion of its board instead of its entirety every year.

PPG said on Tuesday it would take a charge of $185 million to $200 million, excluding some non-cash items, in the second quarter as a result of the cost savings program.

Shares of the company were down 1.6% at $106 before the bell.

(Reporting by Shanti S Nair in Bengaluru; Editing by Sriraj Kalluvila)

((ShantiS.Nair@thomsonreuters.com; +1 646 223 8780 Ext: 9897; Reuters Messaging: shantis.nair.thomsonreuters.com@reuters.net))

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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