PPG to Sell Architectural Coatings Business; Announces Cost Reduction Program

PPG Industries, a global leader in paints, coatings, and specialty materials, announced on October 17 that it has agreed to sell its U.S. and Canadian architectural coatings business to American Industrial Partners (AIP) for $550 million. The sale includes PPG's distribution and manufacturing centers related to the business. The transaction is anticipated to be finalized by late 2024 or early 2025.

In addition to the sale, PPG also unveiled a comprehensive cost reduction program. It will save $175 million each year after implementing these initiatives. This will start saving them $60 million in 2025 annually. This multi-year program will focus on reducing structural costs primarily in Europe and other global businesses, as well as corporate costs following the recent divestitures.

The sale of this business and the cost reduction program are part of PPG's ongoing efforts to optimize its portfolio and improve its financial performance. The company's architectural coatings businesses in other regions will remain a central part of its portfolio. As further cost-cutting initiatives, PPG plans to shut off some of its offices and other miscellaneous expenses. This will cost them $250 million (EBIT) in the last quarter of 2024. They will also have other costs in the coming years, including layoffs. In total, about 1,800 jobs could be impacted, mostly in Europe and the United States.

The transaction includes the following facilities-

•  Manufacturing: East Point, Georgia; Oakwood, Georgia; Louisville, Kentucky; Huron, Ohio; Reno, Nevada; Carrollton, Texas; Temple, Texas; Delta, British Columbia (Canada); and Vaughan, Ontario (Canada).

• Distribution Centers: Huron, Ohio; Oakwood, Georgia; Reno, Nevada; Aurora, Illinois; Flower Mound, Texas; Riverside, California; Reading, Pennsylvania; Carolina, Puerto Rico; Calgary, Alberta (Canada); Delta, British Columbia (Canada); Toronto, Ontario (Canada); and Moncton, New Brunswick (Canada).

• Over 15,000 points of sale, comprising 750 company-owned stores, 6,600 independent dealer locations, and 8,100 major home improvement centers and retail outlets across the U.S., Canada, and Puerto Rico. 

• Leased headquarters for leadership and administrative teams located in Cranberry, Pennsylvania; Vaughan, Ontario (Canada); and Boucherville, Quebec (Canada).

PPG's chairman and chief executive officer Tim Knavish, however expressed satisfaction with the agreement with AIP. “We are pleased to reach an agreement with AIP and believe the business is well positioned to leverage its current positive momentum, leading brands, proven innovation, established customers, and dedicated and talented employees,” he said in a press statement. “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.” Knavish added.

Notably, PPG's architectural coatings business in the U.S. and Canada generated approximately $2 billion in net sales in 2023. This sale will allow PPG to focus on areas where it has the strongest competitive advantage.

AIP is an industrials investor with approximately $16 billion in assets under management. AIP focuses on industrial businesses across a broad range of end markets, including aerospace and defense, automotive, building products.