PPG Industries has distanced itself from the struggling U.S. automotive market by selling its controlling stake in its auto glass division for $330 million to a new company formed by private-equity firm Kohlberg & Company LLC.
PPG will gain a 40% minority interest in the company, which will be reclassified as continuing operations in PPG's financial statements after the company listed it as discontinued operations in September 2007.
The move comes a week after all three Detroit automakers reported major sales declines in June. The volatile industry is one reason PPG Chairman and CEO Charles Bunch says the company made the move.
"This transaction is another positive step forward in our portfolio transformation," Bunch said in a statement. "It enables us to focus more on coatings and specialty products, and significantly reduces PPG's exposure to the U.S. automotive market."
The sale will result in $25 million in aftertax charges in the second quarter for PPG.
PPG's auto glass business manufactures and fabricates automotive glass products in nine plants throughout the Midwest and Canada. In addition, there are nine satellite parts assembly plants, and there are Lynx Services claims management centers in Fort Myers, Fla., and Paducah, Ky. Combined, the businesses employ approximately 4,400 people.