PPG Industries will separate its commodity chemicals business and then merge it with Georgia Gulf in a deal valued at $2.1 billion, officials with both companies confirmed on Thursday.
Following completion of the transaction, which is expected to occur in late 2012 or early 2013, the combined company is expected to have annual revenues of approximately $5 billion and be the third-largest chlor-alkali producer and second-largest vinyl chloride monomer producer in North America.
The terms of the deal call for PPG to form a new company by separating its commodity chemicals business through a spinoff, and then immediately merging the business with Georgia Gulf in a Reverse Morris Trust transaction.
The merger will result in PPG shareholders receiving approximately 50.5% of the shares of the merged company, with existing Georgia Gulf shareholders owning approximately 49.5%.
The combined company will be a leading integrated chemicals and building products company that we believe will benefit from significant integration and scale, a broad portfolio of downstream products, as well as the regional advantage of low-cost North American natural gas, said Paul Carrico, CEO of Georgia Gulf.
In the transaction, PPG will transfer related environmental liabilities, pension assets and liabilities and other post-employment benefits (OPEB) obligations to the newly-merged company.
We are pleased to have reached this agreement as this transaction is another major step in our strategic transformation into a more focused coatings and specialty products company, added PPG chief Charles E. Bunch.
The transaction is subject to approval by Georgia Gulf shareholders and customary closing conditions, relevant tax authority rulings and regulatory approvals.