PPG Industries (NYSE: PPG) (“PPG”) and Georgia Gulf Corporation (NYSE:
GGC) (“Georgia Gulf”) today announced that the boards of directors of
both companies have approved definitive agreements under which PPG will
separate its commodity chemicals business and then merge it with Georgia
Gulf. This business combination is expected to deliver enhanced value
for the shareholders of both companies.
The terms of the transaction call for PPG to form a new company by
separating its commodity chemicals business through a spinoff or split
off, and then immediately merging the business with Georgia Gulf or a
Georgia Gulf subsidiary in a Reverse Morris Trust transaction. The
merger will result in PPG shareholders receiving approximately 50.5
percent of the shares of the merged company (“The Newly Merged
Company”), with existing Georgia Gulf shareholders owning approximately
49.5 percent of The Newly Merged Company.
The transaction value of approximately $2.1 billion consists of $900
million of cash to be paid to PPG, approximately $95 million of assumed
debt, about $87 million of minority interest, and Georgia Gulf shares to
be received by PPG shareholders valued at $1.0 billion based on Georgia
Gulf’s closing stock price on July 18, 2012. In the transaction, PPG
will transfer related environmental liabilities, pension assets and
liabilities and other post-employment benefits (OPEB) obligations to The
Newly Merged Company.
Following completion of the transaction, which is expected to occur in
late 2012 or early 2013, the combined company is expected to have annual
revenues of approximately $5 billion and be the third-largest
chlor-alkali producer and second-largest vinyl chloride monomer producer
in North America.
“This transaction creates a global industry leader with substantial
opportunities for long-term growth and enhanced shareholder value,” said
Paul Carrico, president and chief executive officer of Georgia Gulf.
“The combined company will be a leading integrated chemicals and
building products company that we believe will benefit from significant
integration and scale, a broad portfolio of downstream products, as well
as the regional advantage of low-cost North American natural gas. This
transaction is a natural strategic fit for Georgia Gulf that provides
tremendous value for all stakeholders, including shareholders,
customers, employees and the communities in which we operate. We are
excited to work together with the talented employees of PPG’s commodity
chemicals business to combine our strengths and execute on the
significant opportunities inherent in this transaction.”
PPG Chairman and CEO Charles E. Bunch said, “We are pleased to have
reached this agreement as this transaction is another major step in our
strategic transformation into a more focused coatings and specialty
products company. This is a unique opportunity to create significant
value for PPG shareholders and to share in synergies that would not be
available to PPG’s commodity chemicals business on its own.”
Bunch added, “This further strengthens PPG’s already strong cash
position and will provide us the opportunity to increase cash deployed
for earnings-accretive activities such as acquisitions, organic growth
initiatives, debt repayment and PPG share repurchases. Finally, we
intend to maintain our dividend, and our long heritage of increasing our
annual dividend payout.”
Governance and Management of The Newly Merged Company
The merged company will be led by Georgia Gulf’s President and CEO Paul
Carrico and a senior management team comprised of both Georgia Gulf and
current PPG commodity chemicals employees. The board of directors will
consist of the eight existing Georgia Gulf board members and three new
members to be designated by PPG, including Michael H. McGarry, who is
currently senior vice president of PPG’s commodity chemicals business
and will remain with PPG after the combination. The merged company will
have approximately 6,400 employees working at more than 40 facilities,
primarily in North America.
Approvals
The transaction is subject to approval by Georgia Gulf shareholders and
customary closing conditions, relevant tax authority rulings and
regulatory approvals. Debt financing has been committed by Barclays and
J.P. Morgan Chase Bank.
Advisors
Barclays and Houlihan Lokey served as Georgia Gulf’s financial advisors,
and Jones Day served as its legal advisor. Lazard served as PPG’s
financial advisor, and Wachtell, Lipton, Rosen & Katz served as its
legal advisor.
Conference Call and Webcast Details
PPG and Georgia Gulf will provide a joint presentation on the proposed
transaction via conference call today, July 19, at 8:30 a.m. ET. The
conference call dial-in numbers are: in the United States, 866-383-7998;
international, 617-597-5329; passcode 47579695. The conference call also
will be available in listen-only mode via Internet broadcast from PPG’s
website at www.ppg.com
and Georgia Gulf’s website at www.ggc.com.
A telephone replay will be available today, July 19, beginning at
approximately 10:30 a.m. ET, through Thursday, July 26, at 11:59 p.m.
ET. The dial-in numbers for the replay are: in the United States,
888-286-8010; international, 617-801-6888; passcode 37941736. A Web
replay also will be available on PPG’s Investor Center at www.ppg.com/corporate/investorcenter
and Georgia Gulf’s website at www.ggc.com,
beginning at approximately 10:30 a.m. ET, today, July 19, 2012, through
Friday, July 19, 2013.
About Georgia Gulf
Georgia Gulf is a leading, integrated North American manufacturer of two
chemical lines, chlorovinyls and aromatics, and manufactures vinyl-based
building and home improvement products. The company’s vinyl-based
building and home improvement products, marketed under the Royal
Building Products and Exterior Portfolio brands, include window and door
profiles, mouldings, siding, pipe and pipe fittings, and deck products.
Georgia Gulf, headquartered in Atlanta, Georgia, has manufacturing
facilities located throughout North America to provide industry-leading
service to customers. For more information, visit www.ggc.com.
About PPG and PPG’s Commodity Chemicals Business
PPG Industries' vision is to continue to be the world’s leading coatings
and specialty products company. Through leadership in innovation,
sustainability and color, PPG helps customers in industrial,
transportation, consumer products, and construction markets and
aftermarkets to enhance more surfaces in more ways than does any other
company. Founded in 1883, PPG has global headquarters in Pittsburgh and
operates in more than 60 countries around the world. Sales in 2011 were
$14.9 billion. PPG shares are traded on the New York Stock Exchange
(symbol: PPG). For more information, visit www.ppg.com.
PPG’s commodity chemicals business is a global producer of chlorine,
caustic soda and related chemicals for use in applications such as
chemical manufacturing, pulp and paper production, water treatment,
plastics production and agricultural products, with manufacturing
facilities in the U.S., Canada and Taiwan.
Forward-Looking Statements
This press release contains certain statements about PPG Industries,
Inc., PPG’s commodity chemicals business and Georgia Gulf Corporation
that are “forward-looking statements” within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. These matters involve
risks and uncertainties as discussed in PPG’s and Georgia Gulf’s
periodic reports on Form 10-K and Form 10-Q, and their current reports
on Form 8-K, filed from time to time with the Securities and Exchange
Commission (“SEC”). The forward-looking statements contained in this
press release may include statements about the expected effects on PPG,
PPG’s commodity chemicals business and Georgia Gulf of the proposed
separation of PPG’s commodity chemicals business and merger of PPG’s
commodity chemicals business with Georgia Gulf or a subsidiary of
Georgia Gulf (the “Transaction”), the anticipated timing and benefits of
the Transaction, and PPG’s and Georgia Gulf’s anticipated financial
results, and also include all other statements in this press release
that are not historical facts. Without limitation, any statements
preceded or followed by or that include the words “targets,” “plans,”
“believes,” “expects,” “intends,” “will,” “likely,” “may,”
“anticipates,” “estimates,” “projects,” “should,” “would,” “could,”
“positioned,” “strategy,” “future,” or words, phrases or terms of
similar substance or the negative thereof, are forward-looking
statements. These statements are based on the current expectations of
the management of PPG and Georgia Gulf (as the case may be) and are
subject to uncertainty and to changes in circumstances, and involve
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied in such forward-looking
statements. In addition, these statements are based on a number of
assumptions that are subject to change. Such risks, uncertainties and
assumptions include: the satisfaction of the conditions to the
Transaction and other risks related to the completion of the Transaction
and actions related thereto; PPG’s and Georgia Gulf’s ability to
complete the Transaction on the anticipated terms and schedule,
including the ability to obtain shareholder and regulatory approvals and
the anticipated tax treatment of the Transaction and related
transactions; risks relating to any unforeseen liabilities, future
capital expenditures, revenues, expenses, earnings, synergies, economic
performance, indebtedness, financial condition, losses and future
prospects; business and management strategies and the expansion and
growth of Georgia Gulf’s operations; Georgia Gulf’s ability to integrate
PPG’s commodity chemicals business successfully after the closing of the
Transaction and to achieve anticipated synergies; and the risk that
disruptions from the Transaction will harm PPG’s or Georgia Gulf’s
businesses. However, it is not possible to predict or identify all such
factors. Consequently, while the list of factors presented here is
considered representative, no such list should be considered to be a
complete statement of all potential risks and uncertainties. Unlisted
factors may present significant additional obstacles to the realization
of forward-looking statements. Forward-looking statements included
herein are made as of the date hereof, and neither PPG nor Georgia Gulf
undertakes any obligation to update publicly such statements to reflect
subsequent events or circumstances.
Additional Information and Where to Find It
This communication does not constitute an offer to buy, or solicitation
of an offer to sell, any securities of Georgia Gulf, PPG’s commodity
chemicals business or PPG. In connection with the Transaction, Georgia
Gulf will file with the SEC a registration statement on Form S-4 that
will include a proxy statement and prospectus of Georgia Gulf relating
to the Transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS, AND ANY OTHER
RELEVANT DOCUMENTS, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT GEORGIA GULF, PPG’S COMMODITY
CHEMICALS BUSINESS AND THE TRANSACTION. Investors and security holders
will be able to obtain these materials (when they are available) and
other documents filed with the SEC free of charge at the SEC’s website, www.sec.gov.
In addition, copies of the registration statement and proxy
statement/prospectus (when they become available) may be obtained free
of charge by accessing Georgia Gulf’s website at www.ggc.com,
clicking on the “Investors” link and then clicking on the “SEC Filings”
link; or upon written request to Georgia Gulf at Georgia Gulf
Corporation, 115 Perimeter Center Place, Suite 460, Atlanta, Georgia
30346, Attention: Investor Relations; or upon written request to PPG at
PPG Industries, Inc., One PPG Place, Pittsburgh, Pennsylvania 15272,
Attention: Investor Relations. Shareholders may also read and copy any
reports, statements and other information filed by Georgia Gulf or PPG
with the SEC at the SEC public reference room at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit
the SEC’s website for further information on its public reference room.
Participants in the Solicitation
Georgia Gulf, PPG, and certain of their respective directors, executive
officers and other members of management and employees may be deemed to
be participants in the solicitation of proxies from shareholders in
respect of the Transaction under the rules of the SEC. Information
regarding Georgia Gulf’s directors and executive officers is available
in its 2011 Annual Report on Form 10-K filed with the SEC on Feb. 24,
2012, and in its definitive proxy statement filed with the SEC on April
16, 2012, in connection with its 2012 annual meeting of stockholders.
Information regarding PPG’s directors and executive officers is
available in its 2011 Annual Report on Form 10-K filed with the SEC on
Feb. 16, 2012, and in its definitive proxy statement filed with the SEC
on March 8, 2012, in connection with its 2012 annual meeting of
stockholders. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests,
by security holdings or otherwise, will be contained in the registration
statement and proxy statement/prospectus and other relevant materials to
be filed with the SEC when they become available.
