PPG Industries said yesterday that it reached a deal to sell a majority interest in its automotive glass unit for $330 million to Kohlberg & Co., a private equity firm in Mount Kisco, N.Y.
Under terms of the agreement, PPG will retain a 40 percent stake in a new venture to be formed by Kohlberg. After fees, expenses, taxes and other payments, PPG expects net cash proceeds of $270 million.
The auto glass division employs about 4,400 in North America. It supplies windshields, sunroofs and windows for car and truck manufacturers; supplies and distributes replacement auto glass; operates insurance claims centers; and owns subsidiaries that specialize in glass management software. Among its facilities are the Creighton glass plant in East Deer, where about 200 people work and which dates to 1883 and was PPG's first manufacturing site. Other regional plants are in Meadville, Crawford County, and Tipton, Blair County.
PPG has been trying to unload the auto glass operations as part of its strategic shift away from glass and chemicals into growth businesses such as coatings and specialty products including Transitions eyewear.
"This transaction is another positive step forward in our portfolio transformation ... and significantly reduces PPG's exposure to the U.S. automotive market," PPG Chairman Charles Bunch said in a statement.
Last year, PPG was set to sell the business to California-based Platinum Equity for $500 million, but that deal was scrapped in December when Platinum pulled out and accused PPG in a lawsuit of misrepresenting the operations' financial health.
Before PPG's deal with Platinum, Kohlberg expressed interest in the glass business, said PPG spokesman Jack Maurer.
After the Platinum deal fell apart, Kohlberg resurfaced as a potential buyer, he said.
Officials from Kohlberg did not return calls for comment.
"We see this as very positive for our shareholders," Mr. Maurer said. "It gives us potential upside in the minority interest."
PPG said it would take charges of $25 million after-tax related to the sale in the second quarter. The company expects to record a "slight book gain" of an undetermined amount at the time of the sale, which is targeted for the third quarter.
Kevin McCarthy, an analyst with Banc of America Securities in New York, said in a report: "The financials appear slightly more attractive than the prior, failed deal with Platinum. We view the deal as a positive step that should allow PPG to advance its ongoing transformation into a specialty-chemicals company with higher growth and diminished cyclicality."
Kohlberg's Web site says it targets companies "where it perceives substantial opportunities for improved performance."
Shares in PPG closed at $56.30, up 65 cents.
First Published: July 9, 2008, 4:00 a.m.