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PPG Industries announced late yesterday that it has signed an agreement with Platinum Equity in Beverly Hills, Calif., to sell its automotive original equipment manufacture (OEM) glass and automotive replacement glass (ARG) and services businesses for approximately $500 million. glassBYTEs.com™ reported earlier this week that there was a possibility the businesses would be sold to a private equity firm, and this speculation proved to be correct. Platinum Equity says it focuses on "business continuity as one of the most critical measures of a successful transition," according to its website. It also says it aims to provide uninterrupted customer service, minimal employee uncertainty and preservation of the seller's brand reputation. "Our ability to maintain business continuity through transition is what allows us to pursue deals that pure financial buyers might forego," the company says. Platinum owns a number of companies from a variety of industries including the automotive aftermarket industry (American Racing Equipment), chemical manufacturing, communications equipment and services and telecommunication services (which comprises the largest part of its portfolio), industrials, logistics services, pharmaceutical marketing services, professional turf care, software, steel services, supply chain management solutions and transportation services. The company was founded in 1995 by chairman and chief executive officer Tom Gores. Company spokesperson Mark Barnhill told glassBYTEs.com™/AGRR magazine that it is too early to discuss the details of the acquisition by Platinum Equity, since the transaction is not yet complete. "We've signed a definitive agreement to buy the business … the transaction is not complete yet," he says. "It's premature for us to talk about the business and what we're going to do with it." He adds that Platinum cannot disclose much since PPG is a publicly owned company. "It is a publicly owned company and we must follow the rules of disclosure that accompany the nature of a publicly owned business," Barnhill adds. Barnhill does not expect the completion of the sale to take long, though. "I think we'll be in a position to talk to you with in a few weeks when the sale is final," he says. PPG spokesperson Betsy Bialosky could not be reached for comment this morning. It had been rumored in recent months that other possible purchasers included Auburn, Mich.-based Guardian Industries. A source familiar with PPG who wished to remain anonymous says he suspects the alleged Guardian deal may have fallen through due to union issues—though he notes this is pure speculation. "Assuming they were talking to Guardian and that fell through, I'm going to guess, and this is strictly speculation, that maybe it had something to do with the union contracts," he says. Ian Graham of Windshield Solutions in Cloverdale, Va., says this news didn't come as much of a shock to him. "I wasn't a bit surprised. It's exactly what I expected," he says. "I think it would have been a bit more exciting had it been sold to an industry player, but the private equity firm is exactly what I expected." Dave Hackett of Premier Auto Glass in Waukesha, Wis., agrees. "I was surprised earlier when the news first came out that PPG was looking for a buyer, but now that they have sold I am not at all surprised an equity firm purchased them," Hackett says. "The question now is, how long will Platinum Equity hang on before selling PPG again?" The question Hackett asks is one on the minds of many industry professionals. If the company does sell off the business, or portions of the business, it could have more of an effect than the current situation. "As far as what effect it will have on my business I don't expect it to have much of an effect at all at the moment because nothing will change right away," says Graham. "The private equity firm will begin to trim whatever fat it can find and then most likely split the company up into pieces and sell it off. That's what private equity firms do after all." Hackett says an inside source told him he doesn't have anything to worry about—at least in his area. "I feel at this juncture it will have no effect on our business unless PPG moved out of our market," he says. "After speaking with one of their regional reps (whom I have known for almost 20 years), there is no anxiety or feeling that they will move out or close here. Other markets? That's anybody's guess." No matter what, most agree the story's not complete yet. "There is no doubt changes are ahead," says Neil Duffy of Auto Glass Menders in San Jose, Calif. "Platinum may have a buyer for one or more segments in the wings waiting. Platinum may wait, reduce expenses and sell off much later." CLICK HERE to read the official press release from PPG announcing the sale of the business. CLICK HERE to read Russ Corsi's recent Off the Line column from AGRR magazine discussing the impending sale. CLICK HERE to read coverage of the story from the Pittsburgh Tribune-Review. CLICK HERE to read coverage of the story from the Meadville Tribune. CLICK HERE to read the full text of a letter written by PPG chair Charles Bunch regarding the sale. Need more info and analysis about the issues? |
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Platinum
Equity Comments on PPG Acquisition; Industry Reacts to News