ATLANTA (July 19, 1:15 p.m. ET) — Georgia Gulf Corp. plans to expand its chlorine-based businesses by merging with PPG Industries' commodity chemicals business.
PPG's commodity chemicals operations include production of chlorine, caustic soda, chlorine derivatives, Accu-Tab chlorination tables for swimming pools and other applications, and phosgene derivatives. Georgia Gulf Corp. of Atlanta is vertically integrated in production of chlorine, vinyl chloride, PVC and compounds, and extruded and molded PVC building products.
Pittsburgh-based PPG will form a new company by separating its chemical chemicals business through a spin-off and then immediately merge the business with Georgia Gulf or a Georgia Gulf subsidiary in what could be called a Reverse Morris Trust transaction. PPG shareholders would obtain 50.5 percent of the merged company and existing Georgia Gulf shareholders would own the rest.
The transaction would be valued at about $2.1 billion comprising $900 million in cash paid to PPG, about $95 million of assumed debt, about $87 million of minority interest and Georgia Gulf shares worth about $1 billion distributed to PPG shareholders based on Georgia Gulf' closing stock price on July 18. PPG will transfer environmental liabilities, pension assets and liabilities and other post-employment benefits obligations to the newly merged company.
“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,” stated Georgia Gulf President and CEO Paul Carrico in a July 19 news release.
“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,” said PPG Chairman and CEO Charles E. Bunch in a news release.
The deal is expected to close in late 2012 or early 2013.