Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Acquisitions and Divestitures

Acquisitions and Divestitures

During 2013, the Company completed the acquisition of two coatings businesses for a total purchase price of $983 million, net of cash acquired and purchase price adjustments.

North American Architectural Coatings Acquisition

On April 1, 2013, PPG finalized the acquisition of the North American architectural coatings business of Akzo Nobel N.V., Amsterdam, the Netherlands ("North American architectural coatings acquisition") for $954 million, net of cash acquired of $14 million, and a preliminary working capital adjustment. The purchase price is subject to customary post-closing adjustments. The acquisition further extends PPG’s architectural coatings business in the United States, Canada and the Caribbean. With this acquisition, PPG has expanded its reach in all three major North American architectural coatings distribution channels, including home centers, independent paint dealers and company-owned paint stores. Since April 1, 2013, the results of this acquired business have been included in the results of the architectural coatings - Americas and Asia Pacific operating segment, within the Performance Coatings reportable segment. Net sales reported by PPG from the date of acquisition from this acquired business were approximately $1.2 billion for the year ended December 31, 2013. Income from continuing operations related to this acquisition was in the mid-single digit percentage return on sales for the year.

PPG is in the process of completing valuations of assets acquired and liabilities assumed for the North American architectural coatings acquisition. As such, the allocation of the purchase price is subject to change. The following table summarizes the estimated fair value of assets acquired and liabilities assumed as reflected in the preliminary purchase price allocation for the North American architectural coatings acquisition.

	(Millions)
Current assets	$	550
Property, plant, and equipment	180
Trademarks with indefinite lives	174
Identifiable intangible assets with finite lives	196
Goodwill	234
Other non-current assets	61
Total assets	$	1,395
Current liabilities	(332		)
Accrued pensions	(29		)
Other post-retirement benefits	(40		)
Other long-term liabilities	(40		)
Total liabilities	$	(441	)
Total purchase price, net of cash acquired	$	954

The identifiable intangible assets with finite lives in the table above, which consist primarily of customer relationships and acquired technology, are subject to amortization over a weighted average period of 10 years. See Note 6 "Goodwill and Other Identifiable Intangible Assets" for further details regarding PPG's intangible assets.

The following information reflects the net sales of PPG for the years ended December 31, 2013 and 2012 on a pro forma basis as if the transaction for the North American architectural coatings acquisition had been completed on January 1, 2012.

Condensed Consolidated Pro Forma information (unaudited)
	Year ended
Millions	2013	2012
Net sales	$15,480	$15,049

The pro forma impact on PPG's results of operations, including the pro forma effect of events that are directly attributable to the acquisition, was not significant. While calculating this impact, no cost savings or operating synergies that may result from the acquisition were included.

Deft Acquisition

In May 2013, the Company completed the acquisition of certain assets of Deft Incorporated, a privately-owned U.S. based specialty coatings company, for approximately $25 million. The acquisition enhances the coatings capabilities of PPG’s aerospace business. Deft products include structural primers and military topcoats for the North American aviation industry. In addition, Deft produces some architectural and general industrial coatings.

2012 Acquisitions

During 2012, the Company completed four acquisitions related to its coatings businesses. The total cost of the acquisitions was $288 million, including debt assumed of $122 million. These acquisitions also provide for contingent payments and escrowed holdbacks of a portion of the acquisition cost. Substantially all of the acquisition activity relates to the three acquisitions described below.

In December 2012, the Company completed the acquisition of the business of Spraylat Corp., a privately-owned U.S. based industrial coatings company, for approximately $75 million The company operates production facilities in the U.S., Europe and China. Spraylat specializes in high-quality industrial liquid and powder coatings with excellent performance characteristics that are applied to metal, glass and plastic substrates.

In early January 2012, PPG completed the purchase of European coatings company Dyrup A/S (“Dyrup”), based in Copenhagen, Denmark, from its owner, Monberg & Thorsen, a public holding company, for $44 million of which $26 million is currently being held in escrow, and assumed debt of $120 million and acquired cash of $6 million. Dyrup, a producer of architectural coatings and woodcare products, operates six manufacturing facilities throughout Europe, and its products are sold primarily in Denmark, France, Germany, Portugal, Poland, and Spain through professional and do-it-yourself channels.

Also in early January 2012, PPG completed the purchase of the coatings businesses of Colpisa Colombiana de Pinturas and its affiliate, Colpisa Equador (“Colpisa”), for $38 million. Colpisa manufactures and distributes coatings for automotive OEM, automotive refinish and industrial customers in Colombia and Ecuador.

The purchase price allocations related to the acquisitions made in 2012 resulted in an excess of purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed, which has been recorded as an addition to "Goodwill." The Dyrup and Colpisa acquisitions included an $8 million flow-through cost of sales, primarily in the first quarter of 2012, of the step up to fair value of inventory acquired.

The following table summarizes the fair value of assets acquired and liabilities assumed as reflected in the purchase price allocations for the Dyrup, Colpisa, and Spraylat acquisitions.

	(Millions)
Cash	$	6
Current assets	167
Property, plant, and equipment	91
Goodwill	35
Identifiable intangible assets	57
Other non-current assets	19
Total assets	$	375
Short-term debt	(110		)
Current liabilities	(71		)
Long-term debt	(10		)
Other long-term liabilities	(22		)
Total liabilities	$	(213	)
Total purchase price including cash in escrow and contingent payments	$	162

Divestitures

In July 2013, PPG reached an agreement to divest its 51% ownership interest in Transitions Optical to Essilor International, which currently holds a 49% interest in the venture. Transitions Optical is a global supplier of photochromic lenses and a consolidated subsidiary of PPG. The transaction reflects an enterprise value of approximately $3.4 billion, with PPG receiving cash at closing of $1.73 billion pretax or approximately $1.5 billion after-tax, subject to certain post-closing working capital and net debt adjustments. In 2013, Transitions Optical had net sales of approximately $825 million. Essilor will also enter into multi-year agreements with PPG for continuing supply of photochromic materials and research and development services and will acquire PPG's optical sunlens business. The transaction is expected to close in the first half of 2014, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals.

Currently, all Transitions Optical net sales are consolidated in PPG's financial statements. Essilor's minority share of the joint venture's net earnings is reflected as a reduction to PPG's net income and presented in the financial statements as “Net income attributable to non-controlling interests”. Upon receipt of regulatory approvals, PPG expects to account for Transitions Optical as discontinued operations.

Separation and Merger Transaction

On January 28, 2013, the Company completed the previously announced separation of its commodity chemicals business and merger of its wholly-owned subsidiary, Eagle Spinco Inc., with a subsidiary of Georgia Gulf Corporation in a tax efficient Reverse Morris Trust transaction. See Note 22 "Separation and Merger Transaction" for further details.