Back to top

Analyst Blog

Zacks Equity Research

PPG Starts Share Exchange Offer

PPG DD

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

PPG Industries Inc. (PPG - Analyst Report) announced that it has started the share exchange program, which is a part of the deal to split off its Commodity Chemicals business. The split off is related to the separation and merger of Eagle Spinco Inc., a wholly-owned subsidiary of PPG, wherein it will own all the assets and liabilities of PPG’s commodity chemicals business. Eagle Spinco is then expected to merge with a subsidiary of Georgia Gulf Corporation .
    
Under the terms of the exchange offer, PPG shareholders can exercise the option of exchanging all, some or none of their shares of PPG common stock with shares of Eagle Spinco. These Eagle Spinco shares will then automatically convert to Georgia Gulf shares once the merger is complete.

For every $1.00 of PPG common stock, a shareholder will receive about $1.11 of Georgia Gulf stock. PPG said it currently expects to issue approximately 35.24 million shares of Eagle Spinco common stock in the exchange offer. The exact number of shares of Eagle Spinco common stock to be issued will be equal to the greater of 35.20 million or 1.02020202 times the number of shares of Georgia Gulf common stock outstanding immediately prior to the merger
    
The number of shares of PPG common stock that will be accepted in the exchange offer will depend on the final exchange ratio, the number of shares of Eagle Spinco common stock offered and the number of shares of PPG common stock tendered. PPG shareholders will be allowed to exchange shares till 8 a.m. New York time on January 28, 2013.

Few days back, PPG received a favorable private letter ruling from the U.S. Internal Revenue Service (IRS) related to the divestment of its commodity chemicals business.  The receipt of the private letter ruling was a closing condition and an important objective for the completion of the transaction with Georgia Gulf.

In October 2012, PPG released its third quarter 2012 earnings. The company posted earnings of $2.24 a share for the quarter (excluding one-time charges), beating the Zacks Consensus Estimate by 3 cents. The adjusted earnings excluded charges of $9 million associated with the company’s move to divest its commodity chemicals business. Profit (as reported) rose 9% year over year to $339 million or $2.18 a share in the third quarter of 2012, aided by the company’s cost containment measures.

Revenue edged down 0.1% year over year to $3,845 million, missing the Zacks Consensus Estimate of $3,904 million. Sales were adversely impacted by unfavorable currency translation. PPG saw mixed results across its end markets while its North American automotive original equipment manufacturer (OEM) coatings business recorded strong growth in the quarter.

PPG Industries, which competes with the DuPont Performance Coatings segment of  E. I. DuPont de Nemours & Co. (DD - Analyst Report), currently retains a short-term Zacks #3 Rank (Hold). We currently have a long-term Neutral recommendation on the stock.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%