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Japanese firm rules out job losses at Pilkington
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The Japanese company Nippon Sheet Glass ruled out British job losses yesterday in the wake of its acquisition of Pilkington in a deal that values the St Helens-based glassmaker at £2.2bn
The Pilkington board's decision to back the latest offer from NSG, after rebuffing two approaches, ends 180 years of independence for the British company but it will retain its name and become the European headquarters for NSG.
Asked about job losses as a result of the merger, an NSG spokeswoman said: "We are not expecting any - there is very little overlap between the two companies."
NSG has held a 20% stake in Pilkington for some time and the two companies have strong technology ties. "We know them very well; we have been working with them for a long time so it will be business as usual," the spokeswoman said.
Yesterday's deal marks the culmination of a long courtship of Pilkington by the smaller Japanese company. Pilkington's directors, having rebuffed two offers in the past three months, said yesterday that they had decided to recommend a 165p-a-share offer.
Pilkington's chairman, Sir Nigel Rudd, said the NSG offer represented "excellent value" for shareholders. Stuart Chambers, chief executive, said the deal would "expand our geographic reach and enhance Pilkington's position as a global 'world class' glass manufacturer."
Yozo Izuhara, chairman and chief executive of NSG, called the tie-up a "transformational deal for the glass industry. Our historical relationship and cultural fit will allow us to work closely with the management and employees of Pilkington."
Nippon will use bank loans in Japan and Britain to raise 616bn yen (£3bn), which includes the cost of refinancing Pilkington's debts and other costs, the Japanese firm said. It will issue stocks worth a total of ¥110bn to finance the deal.
The agreement will turn Nippon, Japan's second-biggest glassmaker, into a market leader alongside Asahi Glass and St Gobain, with annual sales of about ¥760bn as it builds on Pilkington's dominance in glass for cars and buildings.
Officials at Pilkington, founded in 1826, said the move would help the firm, which already controls a fifth of the global market for glass and is twice the size of Nippon, to extend its reach and improve profitability, fuelled by a rise in demand for glass in the Japanese car industry.
The firm first approached its British target last October with an offer of 150p a share but was turned down. A second offer of 158p was also rejected.
Despite yesterday's agreement, there are concerns about Nippon's ability to finance the takeover. Shinya Yamada, of Credit Suisse, said: "Pilkington has been in the glass business much longer than Nippon Sheet Glass and they have pride as a British firm, so it would be very difficult for Nippon Sheet Glass to control it.
"[Nippon] would have to raise money worth much more than its market cap to finance the deal, and if you think about that, what they are doing is reckless."
Numis Securities said the offer price did "look pretty full".
Pilkington employs some 24,000 people globally, including 1,780 in St Helens.
Nippon stock rose 5.16% yesterday to ¥509. Pilkington was up 2.75p to 161.25p.
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March 3rd, 2006
Source: Business.guardian.co.uk |
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