Pittsburgh-based PPG Industries Inc., a global supplier of paints, coatings, and specialty materials, said Thursday it has reached a definitive agreement to sell 100 percent of its architectural coatings business in the United States and Canada for $550 million to industrials investor American Industrial Partners (AIP).
“We are pleased to reach an agreement with American Industrial Partners and believe the business is well positioned to leverage its current positive momentum, leading brands, proven innovation, established customers, and dedicated and talented employees,” said Tim Knavish, PPG chairman and chief executive officer. “I want to thank the architectural coatings U.S. and Canada employees for their dedication and commitment throughout the years to deliver the quality products and services that meet our customers’ evolving needs.”
The transaction with AIP is expected to close later this year or early in 2025, subject to customary closing conditions. The agreement is the result of PPG’s evaluation of strategic alternatives for the business, which were announced in February, the company said.
“From a PPG perspective, this transaction, along with the pending sale of our silicas products business, demonstrates the active portfolio management by the company and our board,” Knavish said. “These divestitures further optimize our portfolio by improving our organic growth and financial return profiles and will result in increased capability to channel our growth resources to areas where we have the strongest right to win with our customers.”
PPG also Thursday announced a comprehensive cost-reduction program with anticipated annualized pre-tax savings of approximately $175 million once fully implemented, including savings of $60 million in 2025.
The multi-year program is focused on reducing structural costs primarily in Europe and in certain other global businesses, along with other corporate costs following two recently announced agreements to sell PPG’s silicas products business and the architectural coatings business in the U.S. and Canada.
The program includes various facility closures and other targeted fixed costs, said PPG, which will record a pre-tax charge of about $250 million in the fourth quarter of 2024, and other charges over the next several years when certain costs are incurred. In total, PPG expects the cost reduction program to impact about 1,800 positions, primarily in Europe and the U.S.
“In addition, we are taking decisive self-help actions to reduce our overall cost structure,” added Knavish. “While these decisions are difficult, they are necessary to adjust our fixed cost base and to right-size our company following these two business divestitures. None of these actions will impact our ongoing investments or focus on organic growth.”
According to PPG, its architectural coatings business in the U.S. and Canada represented roughly $2 billion of its 2023 total net sales.