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PPG Industries Buys Minority Stake in Taiwan Chlorine Industries

Peter Neil - Author

Apr. 17 2017, Updated 11:35 a.m. ET

PPG gets 40% of TCI

On April 11, 2017, PPG Industries (PPG) announced that it has acquired 40.0% of Taiwan Chlorine Industries (TCI) from China Petrochemical Development Corporation (CPDC) in an all-cash deal. PPG funded the acquisition with cash on hand.

TCI was formed in 1986 as a joint venture between PPG and CPDC, with PPG holding 60.0%. TCI was started with the focus on producing chlorine-based products in Taiwan. PPG, while separating its commodity chemical business in 2013, transferred ownership interest to Axiall, which was acquired by Westlake Chemical (WLK) in 2016.

When PPG sold a 60.0% ownership interest in TCI to Axiall, CPDC was also granted an option to sell its 40.0% interest in TCI to Axiall for $100.0 million. In April 2016, CPDC opted to sell its 40.0% stake in TCI to Axiall, and in June 2016, Axiall designated PPG to purchase this ownership interest.

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PPG Industries’ stock price movement last week

On April 14, 2017, PPG Industries closed at $104.42, falling 1.5% for the week. The Materials Select Sector SPDR ETF (XLB), which holds 4.7% in PPG as of April 14, fell 2.4% and underperformed PPG Industries for the week. PPG’s peers Sherwin-Williams (SHW), Axalta (AXTA), and RPM International (RPM) fell 1.5%, 0.90%, and 4.5%, respectively, for the same period.

PPG stock closed 4.2% above its 100-day moving average of $100.21, indicating an upward trend in the stock. Analysts predict PPG’s 12-month target price to be $111.90, implying a potential return of 7.2% over the closing price on April 13, 2017. On a year-to-date basis, PPG has risen 10.2%.

PPG’s 14-day RSI (relative strength index) of 50 indicates that the stock is neither overbought nor oversold. An RSI of 70 indicates a stock is overbought, while an RSI of 30 indicates a stock is oversold.


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