PPG sells stake in auto glass business

The company expects to get $270 million out of the deal after expenses.

PITTSBURGH — PPG Industries Inc. has agreed to sell a controlling stake in its automotive glass business to a new company formed by investment firm Kohlberg Co. LLC for $330 million plus a 40 percent interest in the new company.

The Pittsburgh-based paint and chemical maker said Tuesday it expects to receive about $270 million in cash from the deal after paying former minority interests, fees, expenses and taxes.

The transaction will allow the company to focus more on coatings and specialty products, and significantly reduce its exposure to the U.S. automotive market, said Charles E. Bunch, PPG’s chairman and chief executive.

The agreement comes after an earlier attempt by PPG to sell the auto glass and services business.

In September, the company announced it was selling the unit to Beverly Hills, Calif.-based Platinum Equity. But Platinum’s affiliates halted the $500 million deal and later filed a lawsuit over a $25 million termination fee.

The auto glass business, recorded as a discontinued operation starting in September 2007, will be reclassified as a continuing operation in the company’s earnings reports to account for PPG’s ownership stake in the newly formed company.

PPG said it will record one-time charges in the second quarter totaling about $25 million after tax for depreciation expenses that were suspended when the business was categorized as discontinued and for the impact of benefit changes.

PPG said it will use proceeds from the transaction for general corporate purposes and will record a slight book gain when the deal is completed, likely in the third quarter.

The auto glass business supplies automotive windshields, rear and side windows, sunroofs and assemblies for auto and truck manufacturers, and supplies and distributes aftermarket replacement auto glass. Its subsidiaries specialize in insurance claim services, glass management software and e-business solutions.

The business employs roughly 4,400 people at facilities in Creighton, Meadville and Tipton, Pa., as well as Berea, Ky.; Crestline, Ohio; Evansville, Ind.; Evart, Mich.; Fort Myers, Fla.; Paducah, Ky.; and Hawkesbury and Oshawa, Ontario.

PPG, a supplier of paints, coatings, chemicals, optical products, specialty materials, glass and fiberglass, has significantly extended its global reach in recent months. In January, the company completed a $3.2 billion acquisition of Dutch coatings manufacturer SigmaKalon Group, Europe’s second-largest coatings maker.

The company hopes to expand further in Asia, particularly China and India, by acquiring small and midsize paint and industrial-coating manufacturers, PPG’s chief executive, Bunch, said in December.

PPG shares rose 23 cents to $55.88 in late morning trading.