PPG Puts Auto Business on the Block

PPG Industries in Pittsburgh has enlisted Goldman Sachs to explore the sale of its automotive OEM glass and automotive replacement glass and services businesses, including LYNX Service, LLC. The company says this is just a preliminary move and it's considering other options for the segment, including acquisitions, restructuring and strategic alliances.

"We have a responsibility to our shareholders to evaluate our portfolio and make sure we're creating shareholder value," says Jack Maurer, spokesman for the company. "It has not been meeting the performance standards that we've set for businesses in our portfolio."

In PPG's annual report, filed on February 21, it said 2006 earnings for its automotive OEM glass segment declined year over year by $9 million. The year before earnings plummeted by a staggering $30 million.

"Significant structural changes continue to occur in the North American automotive industry, including the loss of U.S. market share by General Motors, Ford and Daimler-Chrysler," the report said. "This has created a challenging and competitive environment for all suppliers to the domestic OEMs, including our operating segment. In 2007, the automotive OEM glass business will continue to focus on cost reduction, developing new, value added products and increasing sales volume."

With so much uncertainty over what eventually happens to the OEM glass and automotive replacement glass and services businesses, Maurer had no real timeline for a sale or any other decision. "We're still very much in a valuation stage," Maurer said. "I don't think we can speculate on what alternatives we will decide upon."

CLICK HERE to read the PPG 2006 Annual Report