Ppg Industries, Inc. · NYSE:PPG
Ppg Industries — Merger or Acquisition (November 2012)
22 slides from Ppg Industries's merger presentation, Nov 14, 2012
Slide 1: Georgia Gulf
Georgia Gulf November 2012
Slide 2: Forward-Looking Statements
Forward-Looking Statements Cautionary Statements Regarding Forward-Looking Information This communication contains certain statements relating to future events and our intentions, beliefs, expectations, and predictions for the future. Any such statements other than statements of historical fact are
Slide 3: Legends: Additional Information and Where to Find It
Legends Additional Information and Where to Find it This communication does not constitute an offer to buy, or solicitation of an offer to sell, any securities of Georgia Gulf, and no offer or sale of such securities will be made in any jurisdiction where it would be unlawful to do so. In connection
Slide 4: PPG's Commodity Chemicals to Merge with Georgia Gulf
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 Gulf Total consideration of $2.1 billion, including cash to PPG, issuance of appr
Slide 5: Strategic Benefits of Transaction
5 Strategic Benefits of Transaction Creates a leading, integrated chemicals and building products company with global annual revenues of approximately $5 billion Newly merged company will have substantial cost synergies and greater scale to capitalize on cost advantaged North American natural gas Hi
Slide 6: 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 approximately $5 billion and broad portfolio of leading positions in downstream chemicals and building products Enhanced Vertical Integratio
Slide 7: Creates Integrated Leader Across the Chain
Creates Integrated Leader Across the Chain ECU Capacity ('000s short tons) Source: CMAI. 1. Occidental VCM capacity includes OXYMAR. 2. Reflects Dow’s closure of VCM capacity at Oyster Creek, TX and Plaquemine, LA in 2011. 3. Total PVC capacity relates to Georgia Gulf capacity as PPG does not produc
Slide 8: Chlorine and Caustic Serve Varied End Use Markets
Industry: Chlorine and Caustic Serve Varied End Use Markets North American Caustic Demand North American Chlorine Demand Diverse end uses with majority GDP driven Organics 23% Pulp & Paper 25% Inorganic 23% Other 22% Vinyls 37% 8 Source: IHS Chemical (CMAI) Other 10% Soaps & Detergents 12% Water Tre
Slide 9: Newco Diverse Product Portfolio Creates Opportunity
“Newco” Diverse Product Portfolio Creates Opportunity Chlorine Downstream PVC Downstream 60% internally consumed by a broad mix of chlorine derivatives Multiple downstream growth opportunities Gulf Coast logistics provide excellent access to export markets Organic growth in Building Products as U.S.
Slide 10: Expected Cost Synergies to be Realized Over First Years
10 Expected Cost Synergies to be Realized Over First 2 Years Expected Value ~$40M ~$35M ~$115M Procurement & Logistics Operating Rate G&A Reduction Savings from combined ~$1 billion/year ethylene and natural gas purchases Freight and terminal optimization Operating rate optimization through the chai
Slide 11: Geographic and Product Fit with Major Facilities
Geographic and Product Fit with Major Facilities PPG Commodity Chemicals Georgia Gulf Lake Charles Assets Have Been Operationally Integrated for Nearly 30 years Combined ECU Capacity Combined VCM Capacity 11 Lake Charles 58% Other 42% Lake Charles 56% Other 44%
Slide 12: Combined Map of Facilities
Combined Map of Facilities Georgia Gulf – Building Products Company Headquarters PPG Commodity Chemicals Georgia Gulf – Chemicals 12
Slide 13: Shale Gas Has Changed the Game for North American Chlorovinyls Producers
Shale Gas Has Changed the Game for North American Chlorovinyls Producers 13 Source: CMAI 2012 World Chlor-alkali Analysis, Membrane Capacity Production Economics (Nov 2011) 1. Includes costs associated with catalysts and chemicals Shale Gas has significantly improved Georgia Gulf’s global cost posit
Slide 14: Export Demand and U.S. Housing Recovery to Drive Operating Rates above 90%
Export Demand and U.S. Housing Recovery Expected to Drive Operating Rates above 90% 14 Georgia Gulf’s access to export markets provides a strong base of demand Source: IHS Chemical (CMAI) for Total Capacity, Total Demand, US PVC Exports, and Operating Rate. CDI Operating forecast labeled. lbs billio
Slide 15: US Housing Recovery Should Benefit Georgia Gulf
US Housing Recovery Should Benefit Georgia Gulf 15 Source: Historical Actual - US Census Bureau, Forecasts - IHS Global Insights Georgia Gulf expects improvement in US housing to have a significant positive impact US Housing Starts Leverage to Coming Recovery ‘000s Georgia Gulf believes that it is p
Slide 16: Improves Combined Mid-Cycle EBITDA to $850mm+
Improves Combined Mid-Cycle EBITDA(1) to $850mm+ Higher Integration Level Reduces EBITDA Cyclicality 16 Source: Georgia Gulf Management 1. Assumes corporate costs of $60 million. Chlorovinyls Building Products Aromatics Drivers: Operating rates Natural Gas advantage Chlorine-caustic demand balance D
Slide 17: Merger Strengthens Cash Flow, Maintains Leverage <2x
Merger Strengthens Cash Flow, Maintains Leverage <2x Free Cash Flow (1) Leverage 1. Free cash flow defined as EBITDA, less cash interest, less cash taxes, less capex, less change in working capital. 2. Newly Merged Company pro forma financials include run rate cost synergies of $115mm and calculated
Slide 18: Summary
18 Summary Creates a leading, integrated chemicals and building products company with global annual revenues of approximately $5 billion Newly merged company will have substantial cost synergies and greater scale to capitalize on cost advantaged North American natural gas Highly complementary to str
Slide 19: Appendix
19 Appendix
Slide 20: Business Overviews
Business Overviews Integrated North American Chemicals and Building Products company Manufacturer of custom and other vinyl-based products marketed under the Royal Building Products and Exterior Portfolio brands Well positioned for the future: Shale gas positions North American producers at low end
Slide 21: Pro Forma Financial Profile
Pro Forma Financial Profile Georgia Gulf PPG Commodity Chemicals (1) Newly Merged Company Pro Forma LTM as of 9/30/12 1. Net Sales and EBIT reflect LTM numbers. Assumes FY 2011 D&A value of $41mm for calculation of LTM 9/30/12 EBITDA and capex of $61mm (FY 2011 capex of $89mm less $28mm for acquisit
Slide 22: Pro Forma Capital Structure
Pro Forma Capital Structure Represents drawn amount. The size of the term loan and bonds will be determined by PPG Commodity Chemicals’ tax basis. $95mm in non-recourse debt at PPG Lake Charles RS Cogen facility. Assumes PPG Commodity Chemicals FY 2011 D&A value of $41mm for calculation of PPG Commo
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