PPG Industries Completes the Sale of Its Fiberglass Business
PPG exits the fiber glass business
On September 5, 2017, PPG Industries (PPG) announced the completion of the sale of its fiberglass operations to Nippon Electric Glass. It should be remembered that PPG Industries signed a definitive agreement with Nippon Electric Glass on May 26, 2017. As expected, the deal got closed in 2Q17. PPG Industries is expected to receive $541 million pretax from the proceeds.
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The segment reported revenue of $350 million in fiscal 2016. In its 2Q17 earnings, PPG Industries already classified its Glass segment as “discontinued operations.” With the exit, PPG Industries got rid of its non-core business. Now, it will concentrate on its core business of paints, coatings, and specialty materials.
As part of the deal, Nippon Electric Glass will get facilities in Chester, South Carolina, and Lexington and Shelby, North Carolina. It will also get research and development and administrative operations in Shelby and Harmar, Pennsylvania.
Stock price movement for the previous week
PPG Industries’ stock price fell 1.0% and closed at $103.60 for the week ending September 8, 2017. It underperformed the Materials Select Sector SPDR Fund (XLB), which returned 0.8% for the same period. XLB has invested 4.30% of its portfolio in PPG Industries as of September 8, 2017. PPG’s peers Sherwin-Williams (SHW), RPM International (RPM), and Axalta (AXTA) returned 0.30%, -0.30%, and -3.50%, respectively.
The fall in the stock widened the gap of its 100-day moving average price. PPG Industries traded 3.60% below the 100-day moving average price of $107.52, which indicates the prevailing downward trend in the stock. However, analysts see an upside in the stock. Analysts provided a target price of $115.43 for the next 12 months, which implies a potential return of 11.40% over the closing price on September 8, 2017.