The total transaction value, including assumed debt, is €2.2 billion. Bain Capital has granted a period of exclusivity to PPG Industries and intends to respond to the offer after discussions with appropriate employee representative bodies. Should Bain Capital accept the offer, the acquisition would be subject to customary conditions, including receipt of regulatory approval.
Charles E. Bunch, chairman and chief executive officer, and William H. Hernandez, senior vice president, finance, and chief financial officer, will hold a conference call today at 1:30 p.m. ET to review details of the proposed acquisition. To access the call, dial (800) 230-1951 in the U.S. or (612) 332-0107 internationally, participant code 881432.
SigmaKalon is a global producer of architectural, protective, marine and industrial coatings, and a leading coatings supplier in many parts of Europe and other key national markets across the globe, with an increasing presence in Africa and Asia. SigmaKalon sells architectural coatings directly to professional painters via a network of service centers, and it maintains a network of approximately 500 company-owned stores and approximately 3,000 independent wholesalers that give it direct access to customers.
SigmaKalon was created in 1999 from the merger of Total’s Kalon Group and PetroFina’s Sigma Coatings, and it was acquired in 2003 by Bain Capital. Sales have increased from approximately €1.7 billion in 2003 to approximately €2 billion in 2006.
“The SigmaKalon business has performed well financially and would be a strong complement to our existing coatings businesses,” said Charles E. Bunch, chairman and chief executive officer of PPG. “It would give us an excellent footprint in the European architectural coatings segment, where today we have very nominal participation. This acquisition would give us a more balanced coatings business in Europe, approximately doubling our European sales, and expand our global coatings portfolio by more than 40 percent.”
Bunch added that the acquisition would also strengthen PPG’s participation in higher growth markets, such as Southern and Central Europe, Africa and Asia, and fits well with PPG’s growing presence in protective and marine coatings, spurred by several other recent acquisitions.
Bunch said PPG’s disciplined approach to mergers and acquisitions and its strong track record in acquisition integration will serve it well with the SigmaKalon transition.
“This is an excellent acquisition opportunity for us,” Bunch said. “It fits perfectly with our strategies, and from both geographic and end-use market perspectives, it would enhance PPG’s ability to continue to drive profitable growth, with the end result of increasing shareholder value.”
Michael H. McGarry, vice president, coatings, and managing director, PPG Europe, said, “PPG remains committed to ensuring that both our customers and SigmaKalon’s customers continue to receive excellent performance in quality products and services while we work through the contemplated integration of the businesses. In fact, we believe this proposed acquisition will enhance our ability to meet the needs of all of our coatings customers.”
Lazard is acting as financial advisor to PPG Industries.