PPG Industries, a global leader in paints and coatings, has announced plans to cut 1,800 jobs in Europe and the United States as part of an effort to reduce costs. The company will also sell its architectural coatings business in the United States and Canada to American Industrial Partners (AIP) for $550 million, according to an Oct. 17 company press release.
Tim Knavish, PPG’s chairman and CEO, said he was optimistic about the deal. AIP, a leading industrial investor, currently manages $16 billion in assets in a variety of fields, including industrial services.
“We are pleased to reach an agreement with American Industrial Partners 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.
The transaction is expected to conclude in late 2024 or early 2025 and comes as part of PPG’s strategic evaluation of its portfolio, which was initially announced in February 2024. Goldman Sachs & Co. LLC served as PPG’s financial advisor, with Hogan Lovells U.S. LLP providing legal counsel.
At the same time, the company announced layoffs as part of a “cost reduction program” aimed at saving approximately $175 million annually once implemented. The program primarily targets structural costs in Europe and other global businesses, resulting in about 1,800 job cuts, mostly in Europe and the U.S.
“We are taking decisive self-help actions to reduce our overall cost structure. While these decisions are difficult, they are necessary to adjust our fixed cost base and to right-size our company following these two business divestitures,” Knavish said.
The architectural coatings business being sold represented approximately $2 billion of PPG’s 2023 total net sales. According to the company, this divestiture, along with the pending sale of its silica products business, will optimize PPG’s portfolio and improve its “organic growth” and “financial return profiles”.
Knavish said the recent decisions will allow the company to channel resources for growth into “areas where we have the strongest right to win with our customers.”
The sale includes manufacturing facilities in Georgia, Kentucky, Ohio, Nevada, Texas, and Canada, as well as distribution centers across North America. It also encompasses over 15,000 points of sale, including 750 company-owned stores, 6,600 independent dealer locations, and 8,100 major home improvement centers and retailers across the United States, Canada, and Puerto Rico.
PPG’s architectural coatings business in North America is known for brands such as Glidden, Olympic, Liquid Nails, and Dulux (in Canada). The company will retain its architectural coatings businesses in other regions, including Latin America, Europe, and Asia Pacific, where it holds strong market positions, according to the announcement.
For its part, AIP says it invests in industrial businesses in aerospace and defense, construction products, automotive, chemicals, industrial services, capital goods, logistics, metals and mining, and transportation, among others. The company says it selects “quality industrial businesses” with strong management teams, earning around $25 billion annually with 70,000 employees as of June, 2024.