PPG Industries Inc. (PPG) announced that it has finalized a deal to buy European coatings company Dyrup A/S from public holding company Monberg & Thorsen for a total of 115 million euros ($160 million).
The acquisition is set to close on January 5, 2012.
The buyout of Dyrup will enable PPG to continue to expand its geographic reach within Europe, as well as expand its product portfolio to include Dyrup's established strong brands, particularly in wood care products. Dyrup and PPG represent a strong strategic combination with possibilities for further growth and synergies.
Dyrup is based in Copenhagen, Denmark and produces architectural coatings, in particular wood stains, and specialty products. It employs roughly 950 people and operates six manufacturing facilities in Europe. Its portfolio of brands includes Bondex, Gori and Xylophene, which are sold primarily in Denmark, France, Germany, Portugal, Poland and Spain through professional and do-it-yourself channels.
In July 2011, PPG posted net income of $340 million or $2.12 per share for the second quarter of 2011, compared with $272 million or $1.63 per share in the year-ago quarter. The results were on par with the Zacks Consensus Estimate.
Net sales for the quarter were $4.0 billion, up 15% from $3.5 billion in the second quarter of 2010. It also outperformed the Zacks Consensus Estimate of $3.8 billion. The improvement was attributable to demand improvements, higher pricing in each of its coatings businesses, successful cost reduction initiatives and a gradual industrial recovery worldwide, partly offset by rising raw material costs.
Looking ahead, the company anticipates further pricing gains in every segment, driving volume increases for PPG that it expects to leverage into higher earnings through continued cost focus. PPG continues to work on initiatives to deploy its cash to grow earnings. PPG is continuing to utilize its strong cash position. In the second half of 2011, it expects to deploy $500 million to $1 billion of cash focused on earnings accretion, and will continue its tradition of returning cash to its shareholders.
The strong second quarter performance, along with successful adoption of growth strategies and their meaningful implementation, inspire confidence in the company. In addition, the macro economy and the concerned industry are also showing signs of recovery. Therefore, PPG Industries has a Zacks #1 Rank ('Strong Buy') in the short term and we hold a long-term Neutral recommendation on the stock.
PPG faces stiff competition from the DuPont Performance Coatings segment of EI DuPont de Nemours & Co. (DD) and BASF Coatings AG.
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