Buyout won't break glass firm

Nippon Sheet Glass Co. said the potential benefits of its planned 616 billion yen acquisition of Britain's Pilkington Plc far outweigh the risks.

"It would be quixotic to try to establish from scratch what Pilkington already owns," Chairman Yozo Izuhara told The Asahi Shimbun.

Pilkington, the world's third-largest flat glass maker, operates 37 plants in 24 countries around the world. Izuhara said it costs about 10 billion yen to build a new factory.

Nippon Sheet Glass, Japan's second-largest flat glass maker, announced last week that it will purchase Pilkington to expand its overseas operations.

Overseas markets account for only 15 percent of the company's sales, far lower than the 44 percent of global industry leader Asahi Glass Co.

Some analysts say Nippon Sheet Glass may be overreaching to acquire Pilkington, whose revenue is double its own 265 billion yen.

Izuhara said, however, that the massive investments would not adversely affect the company's financial standing.

"The additional net borrowing from financial institutions will be 140 billion yen," he said. "Pilkington has a profit margin of 10 percent, and we can repay the debt within several years."

The top priority of the company's global expansion will be the United States, where there are many competitors.

"We want to shield ourselves from fluctuations in demand, by enhancing core products, such as items for automobiles and construction," Izuhara said.

Once it becomes more competitive in key sectors, the company plans to raise its share in electronics and other applications, such as sheets for flat-panel displays, he said.

The acquisition would enable Nippon Sheet Glass to increase its research and development spending, which Izuhara said is the decisive factor in competition, both in price and quality.

Izuhara said he expects annual cost savings of 4.4 billion yen by adopting its manufacturing technologies at Pilkington facilities.

"We have to strike a balance between trust and monitoring because two companies with different cultural backgrounds are being united," he said.

600450 Buyout won't break glass firm glassonweb.com
Date: 10 March 2006
Source: Asahi.com

See more news about:

See more from these topics:

Others also read

Prism Architectural are pleased to announce the appointment by Knight Harwood to deliver the external glazing to Kings College, Wimbledon.
Allegion, plc, a leading global security products and solutions provider, has acquired Technical Glass Products (TGP) through one of its subsidiaries.
When designing a three-story restaurant overlooking the Chicago River, a client approached Solar Innovations® for a custom Folding Glass Wall.
Pilkington Spectrum, one of the industry’s most popular glass specifying tool, is now available to use on-the-go following the launch of a new smartphone app.
The W&W Glass installation utilized a Sotawall® Hybrid-Wall® unitized curtain wall system and a Pilkington Optiwhite™ Pilkington Planar™ point supported structural glass retail storefront system at the podium.
Pilkington United Kingdom Limited, part of the NSG Group, has two new patterns joining its popular Pilkington Texture Glass range.

Add new comment