PITTSBURGH - PPG Industries Inc. (NYSE: NYSE:PPG) has agreed to sell its silicas products business to QEMETICA S.A. for approximately $310 million. The transaction is expected to close in the fourth quarter of 2024, pending customary closing conditions. This divestiture follows PPG's announcement on January 9, 2024, regarding its strategic review of the business.
The sale includes PPG's precipitated silicas manufacturing facilities in Lake Charles, Louisiana, and Delfzijl, The Netherlands. Additionally, QEMETICA will lease manufacturing and research and development operations at PPG sites in Barberton, Ohio, and Monroeville, Pennsylvania. About 400 employees leading the silicas products business are expected to be affected by the transition.
PPG Chairman and CEO Tim Knavish commented on the deal, emphasizing the company's intent to sharpen its focus on its core coatings and specialty products businesses. Knavish expressed confidence in QEMETICA's ability to advance the silicas products business and gratitude towards the employees for their contributions.
QEMETICA, a privately held company based in Warsaw, Poland, is recognized for its significant production capacity in Central Europe, particularly in soda ash, vacuum salt, and silicates. The acquisition aligns with QEMETICA's strategy to expand its global footprint and diversify its portfolio.
In 2023, PPG's silicas products business contributed to 1-2% of the company's total net sales. PPG, with a heritage spanning over 140 years, reported net sales of $18.2 billion in 2023 and operates in more than 70 countries.
Morgan Stanley (NYSE:MS) & Co. LLC served as PPG's financial advisor, with Hogan Lovells acting as its legal advisor for the transaction. This news is based on a press release statement issued by PPG.
In other recent news, PPG Industries reported an 11% year-over-year growth in adjusted earnings per diluted share, reaching $2.50 for the second quarter, with sales amounting to $4.8 billion. However, the company's sales decreased by 2%, with organic sales remaining flat. Deutsche Bank (ETR:DBKGn) maintained a Buy rating on PPG Industries, citing the company's strong balance sheet and anticipated return to volume growth. Conversely, RBC Capital and BMO Capital adjusted their outlooks on the company, lowering their price targets to $139 and $161, respectively, due to mixed industry trends and a slight decrease in the 2024 outlook. Furthermore, PPG Industries announced plans to invest $300 million in its North American manufacturing operations to boost automotive coatings production and appointed Pascal Tisseyre as the new Vice President for Government Affairs in the Europe, Middle East, and Africa region. These are among the recent developments that reflect a mix of financial adjustments and strategic decisions for PPG Industries.
InvestingPro Insights
As PPG Industries Inc. (NYSE: PPG) moves forward with the sale of its silicas products business, the company's financial health and strategic maneuvers are of keen interest to investors. PPG's commitment to enhancing shareholder value is reflected in a robust Piotroski Score of 9, indicating sound financial conditions and operational efficiency. This is complemented by a history of consistent dividend growth, with the company raising its dividend for 53 consecutive years, a testament to its financial stability and commitment to returning value to shareholders.
InvestingPro Tips suggest that PPG's management has been actively buying back shares, a move that can often signal confidence in the company's future prospects and a commitment to increasing shareholder value. Moreover, PPG has maintained dividend payments for 54 consecutive years, further reinforcing its position as a reliable dividend-paying stock.
From a financial metrics standpoint, PPG's market capitalization stands at $29.78 billion, with a P/E ratio of 20.8. The company's revenue for the last twelve months as of Q2 2024 is $18.1 billion, with a modest revenue growth of 1.08%. The gross profit margin during the same period is a healthy 42.45%, showcasing the company's ability to maintain profitability.
For investors seeking more detailed analysis and additional InvestingPro Tips, there are 19 more tips available, offering deeper insights into PPG's financial health and future prospects. These can be found at https://www.investing.com/pro/PPG, providing a comprehensive view of the company's performance and potential investment opportunities.
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