Ppg Industries, Inc. · NYSE:PPG
Ppg Industries — Merger or Acquisition (July 2012)
30 slides from Ppg Industries's merger presentation, Jul 19, 2012
Slide 1: Merger of PPG Commodity Chemicals Business with Georgia Gulf Corporation
Exhibit 99.2 Merger of PPG Commodity Chemicals Business with Georgia Gulf Corporation July 19, 2012 Charles E. Bunch Paul Carrico Chairman and CEO President and CEO PPG Industries, Inc. Georgia Gulf Corporation
Slide 2: Forward-Looking Statements
Forward-Looking Statements FORWARD LOOKING STATEMENTS This presentation contains certain statements about PPG Industries, Inc., PPG’s commodity chemicals business and Georgia Gulf Corporation that are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Ac
Slide 3: Charles E. Bunch, Chairman and CEO, PPG Industries, Inc.
Charles E. Bunch Chairman and CEO PPG Industries, Inc. 3
Slide 4: Strategic Benefits of Transaction
Strategic Benefits of Transaction Combination of PPG Commodity Chemicals Business with Georgia Gulf Highly complementary to strategic objectives of both companies, with 1 significant potential to enhance shareholder value of both companies Another significant step in PPG’s transformation to a more f
Slide 5: PPG's Commodity Chemicals to Merge with Georgia Gulf
PPG’s Commodity Chemicals to Merge with Georgia Gulf Transaction overview • Stock-for-stock exchange using Reverse Morris Trust structure • PPG business will be distributed to PPG shareholders through a tax-free separation; then immediately merged with Georgia Gulf or a new subsidiary of Georgia Gul
Slide 6: Significant PPG Shareholder Value Creation
Significant PPG Shareholder Value Creation • Another significant step in PPG’s transformation to a more focused coatings and specialty products company • Reverse Morris Trust provides tax-efficient structure to capture full value of commodity chemicals business for PPG shareholders: • Approximately
Slide 7: PPG's Transformation Continues
PPG’s Transformation Continues 2001 - $8.2B Pro Forma 2011 - $13.2 B 6% Optical & Specialty 8% 9% 27% Materials Coatings 54% Chemicals 13% Glass 83% Coatings & Specialty Coatings & Specialty Materials = $5B Materials = $12B Sales in USD Transaction Furthers PPG’s Portfolio Transformation 7
Slide 8: Consideration for PPG Commodity Chemicals Business
Consideration for PPG Commodity Chemicals Business Financial consideration prior to synergy capitalization: Value of Georgia Gulf Shares (as of July 18, 2012) $1,016 Cash 900 Assumed Debt and Minority Interest 182 Total PPG Shareholder Value - Pre-Synergies $2,098 Implied multiples: EBITDA Multiple
Slide 9: PPG Summary
PPG Summary Strategic: • Continued execution of ongoing PPG strategic objectives Creates shareholder value today: • Immediately enhances shareholder value through tax efficiency and ability to share in synergies and growth of the newly merged company Provides for further shareholder value creation i
Slide 10: Paul Carrico, President and CEO, Georgia Gulf Corporation
Paul Carrico President and CEO Georgia Gulf Corporation 10
Slide 11: Benefits of Transaction for Georgia Gulf
Benefits of Transaction for Georgia Gulf Creates Global Chemicals and Building Products Leader with Increased Scale • Fortune 500 company with pro forma sales of $5 billion and broad portfolio of leading positions in downstream chemicals and building products Enhanced Vertical Integration with Signi
Slide 12: Creates Integrated Leader Across the Chain
Creates Integrated Leader Across the Chain North American ECU Capacity North American VCM North American PVC ECU Capacity ('000s short tons) (’000s short tons) (’000s short tons) 4,000 3,500 3,000 3,000 2,500 3,000 2,500 2,000 2,000 2,000 1,500 1,500 1,000 1,000 1,000 500 500 0 0 0 Georgia Gulf PPG
Slide 13: Diverse Product Portfolio Creates Opportunity
Diverse Product Portfolio Creates Opportunity Chlorine Downstream PVC Downstream Compounds 12% Building Export Products 20% 12% Merchant 40% VCM / PVC 45% Domestic Merchant 56% Derivatives 15% • 60% internally consumed by a • Gulf Coast logistics provide broad mix of chlorine derivatives excellent a
Slide 14: Expected Cost Synergies to be Realized Over First 2 Years
Expected Cost Synergies to be Realized Over First 2 Years Expected Value • Savings from combined ~$1 billion/year ~$40M Procurement & ethylene and natural gas purchases Logistics • Freight and terminal optimization • Operating rate optimization through the chain of ~$35M Operating Rate combined asse
Slide 15: Geographic and Product Fit with Major Facilities
Geographic and Product Fit with Major Facilities Combined ECU Capacity Georgia Gulf Other 44% Lake Charles 56% Chlorine Combined VCM Capacity Other 42% Lake Charles 58% PPG Commodity Chemicals Lake Charles Assets Have Been Operationally Integrated for Nearly 30 years 15
Slide 16: Improves Combined Mid-Cycle EBITDA to $850mm+
Improves Combined Mid-Cycle EBITDA(1) to $850mm+ Georgia Gulf PPG Synergies 1000 Chlorovinyls 800 Drivers: 600 •Operating rates •Natural Gas advantage 400 •Chlorine-caustic demand balance 200 0 Trough Mid-Cycle 150 Drivers: 100 •US and Canadian Housing Starts Building •Remodel/Renovation activity Pr
Slide 17: Merger Strengthens Cash Flow, Decreases Leverage
Merger Strengthens Cash Flow, Decreases Leverage Free Cash Flow (1) Leverage ($ in millions) $450 2.3x 2.2x $400 $381 2.2x $350 2.1x 2.1x $300 2.0x $250 1.9x $200 1.8x $150 $115 1.7x $100 $50 1.6x $0 1.5x (2) Georgia Gulf Standalone Combined Company LTM Georgia Gulf Standalone Debt Combined Company
Slide 18: Summary
Summary Combination of PPG Commodity Chemicals Business with Georgia Gulf Highly complementary to strategic objectives of both companies, with 1 significant potential to enhance shareholder value of both companies Another significant step in PPG’s transformation to a more focused Coatings & 2 Specia
Slide 19: Company Contacts
Company Contacts Investors: Investors: Vince Morales Martin Jarosick (412) 434-3740 (770) 395-4524 Media: Media: Jeremy Neuhart Alan Chapple (412) 434-3046 (770) 395-4538 19
Slide 20: Appendix
Appendix 20
Slide 21: Business Overviews
Business Overviews Georgia Gulf PPG Commodity Chemicals • Integrated North American Chemicals and Building • Global leader in the merchant supply of Chlor-alkali Products company • Attractive product portfolio including chlorine, • Manufacturer of custom and other vinyl-based caustic soda and downst
Slide 22: Combined Map of Facilities
Combined Map of Facilities Georgia Gulf - Chemicals Georgia Gulf – Building Products PPG Company Headquarters 22
Slide 23: Financing Sequencing Overview
Financing Sequencing Overview Step 1: Above Basis Amount Funding Pre-Closing Step 2: Spinoff / Debt Exchange Initial Short-Term Debt Lender Georgia Gulf PPG $660M $660M Shareholders Shareholders PPG Commodity Chemicals Cash Georgia Gulf PPG Notes $660M Cash PPG Commodity $660M $660M Chemicals Notes
Slide 24: Pro Forma Capital Structure
Pro Forma Capital Structure Step 3: Pro Forma Structure PPG Georgia Gulf Shareholders Shareholders PPG Shareholders > 50.5% < 49.5% Georgia Gulf $500M ABL Facility ~$500M Existing 9% Sr. Secured Notes due 2017 PPG Cross guarantee of debt between Georgia Gulf and PPG Commodity Chemicals PPG $240M PPG
Slide 25: PPG Commodity Chemicals Business Financials and EBITDA Reconciliation
PPG Commodity Chemicals Business Financials and EBITDA Reconciliation 3-Year 2009 2010 2011 Average Total Net Sales $1,282 $1,441 $1,741 $1,488 Earnings Before Interest and Taxes (EBIT) 152 189 370 237 Depreciation & Amortization (DA) 40 39 41 40 EBITDA (EBIT + DA) 192 228 411 277 EBITDA % of Sales
Slide 26: Calculation Details - Consideration For Business
Calculation Details - Consideration For PPG Commodity Chemicals Business Value of Georgia Gulf Shares: Georgia Gulf Closing Price (as of July 18, 2012) $28.85 Approximate Shares Delivered to PPG Shareholders 35.2 Total Value Georgia Gulf Shares $1,016 EBITDA Multiple Calculations: Total PPG Sharehol
Slide 27: Pro Forma Financial Profile
Pro Forma Financial Profile LTM as of 3/31/12 PPG Georgia Newly Merged Commodity Gulf Company (2) Chemicals (1) (Figures in $ millions) Total Net Sales $3,295 $1,741 $5,036 EBITDA 241 414 655 % margin 7.3% 23.8% 13.0% Plus: Synergies - - 115 Pro forma EBITDA - - 770 % margin - - 15.3% (2) Pro Forma
Slide 28: Pro Forma Capital Structure
Pro Forma Capital Structure Pro Forma Capital Structure ($ millions) Mult. Of 3/31/2012 Adj. Pro Forma LTM EBITDA Cash $39 - $39 0.1x (1) ABL Facility 29 61 90 0.1x Existing Georgia Gulf Debt 498 - 498 0.6x New Term Loan - 240 240 0.3x RS Cogen Debt (50%) - 95 95 0.1x Total Secured Debt $527 $396 $9
Slide 29: Georgia Gulf Historical Financials
Georgia Gulf Historical Financials ($ in millions) LTM 2009 2010 2011 3/31/12 Total Net Sales $1,990 $2,818 $3,223 $3,295 EBITDA 162 208 230 241 (1) % margin 8.1% 7.4% 7.1% 7.3% (1) EBIT 44 109 129 143 % margin 2.2% 3.9% 4.0% 4.3% Capex 30 46 66 69 1. Adjusted for lease financing obligation. 29
Slide 30: PPG Commodity Chemicals Historical Financials
PPG Commodity Chemicals Historical Financials ($ in millions) LTM 2009 2010 2011 3/31/12 Total Net Sales $1,282 $1,441 $1,741 $1,741 EBITDA (3) 192 228 411 414 (1) % margin 15.0% 15.8% 23.6% 23.8% EBIT 152 189 370 373 % margin 11.9% 13.1% 21.3% 21.4% Capex (4) 24 40 89 89 (2) 1. Assumes constant D&A