Vitro SAB (BMV: VITROA), Mexico’s largest glassmaker, agreed to acquire the flat glass manufacturing and glass coatings operations of Pittsburgh-based PPG (NYSE: PPG) for $750 million in cash.
The transaction will make Vitro a world leader in technology for the flat glass industry, the company says. This operation, based on 2015 figures, would have taken Vitro to sales and EBITDA pro forma figures of USD$1.44 billion and USD$321 million respectively.
Vitro, formerly Vidriera Monterrey, founded in 1909 in Monterrey, Mexico, is one of the world’s major companies in the glass containers and flat glass industries, backed by more than 100 years of experience.
In March 2013, Vitro settled a lengthy $1.2 billion bond restructuring battle with US hedge funds, including Paul Singer’s Elliott Management, Aurelius Capital Management and Davidson Kempner Capital Management. Adrián Sada González (board member of Alfa, Gruma and Cudsa groups) and his son Adrián Sada Cueva (board member of Grupo Financiero Banorte), remained as Vitro’s largest shareholders with a stake of roughly 30%.
In September 2015, Vitro completed the sale of its food and beverage glass container business to Owens-Illinois Inc. (NYSE: OI) for $2.15 billion.
“This investment will strengthen our construction glass business, as it will allow us to participate in the US and Canadian markets and in the segment of high performance glass coatings in which we have no significant presence,” said Vitro chief executive Adrián Sada Cueva.
“Through this acquisition we will be putting together more than 200 years of experience in the production of glass and will continue to meet Vitro’s commitment to our shareholders and stakeholders of creating value, by acquiring a leader in flat glass and glass coatings technology that participates in one of the most important and high value added markets in the world,” said Vitro’s chairman Adrián Sada González.
Alfaro, Dávila y Ríos, SC LLP acted as financial advisor and Cleary Gottlieb Steen & Hamilton as legal advisor for Vitro in this transaction.
The deal is expected to close by the end of 2016, subject to customary closing conditions. Upon completion of this transaction and PPG’s recently announced transaction to divest its European fiber glass operations, approximately 98 percent of PPG’s business portfolio will be focused on paints, coatings and specialty materials.
PPG also announced the retirement of Charles Bunch as executive chairman effective Sept. 1. PPG president and CEO Michael H. McGarry will become chairman and retain his CEO title.
“This transaction represents the end of an historic era for PPG as a manufacturer of flat glass, and it is another major step in our portfolio transformation to focus on paints, coatings and specialty materials,” said McGarry.
PPG will divest its entire flat glass manufacturing and glass coatings operations, including production sites located in Fresno, California; Salem, Oregon; Carlisle, Pennsylvania; and Wichita Falls, Texas; four distribution/fabrication facilities located across Canada; and a research-and-development center located in Harmar, Pennsylvania, near Pittsburgh. PPG’s flat glass business includes approximately 1,200 employees. The business manufactures glass that is fabricated into products used primarily in commercial and residential construction.
PPG is a global supplier of paints, coatings, optical products, specialty materials, glass and fiber glass. PPG operates in more than 70 countries, with 156 manufacturing facilities worldwide, 47,000 employees, and reported net sales of $15.3 billion in 2015. The company serves customers in construction, consumer products, industrial and transportation markets and aftermarkets. The company was founded in 1883 as Pittsburgh Plate Glass by Captain John B. Ford and John Pitcairn in Pittsburgh, Pennsylvania.
Photo: (L-R) Adrián Sada Cuevas, CEO, and Adrián Sada González, Chairman of Vitro SAB.