Acquisitions and Dispositions

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

Acquisitions and Dispositions

Acquisitions and Dispositions

Acquisitions

Consorcio Comex

In November 2014, PPG finalized the acquisition of Consorcio Comex, S.A. de C.V. (“Comex”), an architectural coatings company with headquarters in Mexico City, Mexico for $1.98 billion, net of cash acquired of $69 million. PPG also repaid $280 million of third-party debt assumed in the acquisition. The purchase price is subject to customary post-closing adjustments. Comex manufactures coatings and related products in Mexico and sells them in Mexico and Central America principally through more than 3,700 stores that are independently owned and operated by more than 700 concessionaires. Comex also sells its products through regional retailers and wholesalers, and directly to customers. The company has approximately 3,900 employees, eight manufacturing facilities and six distribution centers. The acquisition further expands PPG's global coatings business and adds a leading architectural coatings business in Mexico and Central America. Since the acquisition, 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 $175 million for the year ended December 31, 2014. Segment income from continuing operations related to this acquisition was in the mid-teen percentage return on these sales.

PPG is in the process of obtaining third-party valuations of assets acquired and liabilities assumed in the Comex 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 Comex.

($ in millions)
Current assets	$	379
Property, plant, and equipment	312
Trademarks with indefinite lives	1,022
Identifiable intangible assets with finite lives	280
Goodwill	1,086
Other non-current assets	32
Total assets	$	3,111
Current liabilities	(357		)
Non-current deferred tax liabilities	(449		)
Long-term debt	(280		)
Accrued pensions	(20		)
Other long-term liabilities	(29		)
Total liabilities	$	(1,135	)
Total purchase price, net of cash acquired	$	1,976

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 16 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, 2014 and 2013 on a pro forma basis as if the transaction for the Comex acquisition had been completed on January 1, 2013.

Condensed Consolidated Pro Forma information (unaudited)
	Year ended
($ in millions)	2014	2013
Net sales	$16,175	$15,232

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 to the consolidated results for either 2014 or 2013. While calculating this impact, no cost savings or operating synergies that may result from the acquisition were included.

Akzo Nobel North American Architectural Coatings

In April 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 $947 million, net of cash acquired and a working capital adjustment. The acquisition further extended PPG’s architectural coatings business in the United States, Canada and the Caribbean. With this acquisition, PPG 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 the date of acquisition, 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.

The following table summarizes the fair value of assets acquired and liabilities assumed as reflected in the final purchase price allocation for the North American architectural coatings acquisition.

($ in millions)
Current assets	$	558
Property, plant, and equipment	184
Trademarks with indefinite lives	174
Identifiable intangible assets with finite lives	196
Goodwill	225
Other non-current assets	49
Total assets	$	1,386
Current liabilities	(326		)
Accrued pensions	(29		)
Other post-retirement benefits	(40		)
Other long-term liabilities	(44		)
Total liabilities	$	(439	)
Total purchase price, net of cash acquired	$	947

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
($ in millions)	2013	2012
Net sales	$14,637	$14,223

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.

Other Acquisitions

For the years presented, the Company also completed the acquisition of several businesses, primarily in the Performance Coatings segment. The total consideration paid for these acquisitions, net of cash acquired and including debt assumed, was $189 million, $36 million and $288 million in 2014, 2013 and 2012, respectively.

Dispositions

Mt. Zion Flat Glass Facility

In September 2014, PPG completed the sale of substantially all of the assets of its former Mt. Zion, Illinois, flat glass manufacturing facility to automotive glass manufacturer Fuyao Glass America Incorporated. As a result of this transaction, the Company recognized a pre-tax gain of $22 million which is reported in the caption "Other income" on the Consolidated Statement of Income. The sale did not include certain production assets which are unique to PPG.

Pittsburgh Glass Works

In July 2014, Pittsburgh Glass Works LLC ("PGW"), an equity affiliate in which PPG has an approximate 40%

ownership interest, sold its insurance and services business and recognized a pre-tax gain on the sale. PPG accounts for its interest in PGW under the equity method of accounting and in the third quarter of 2014 recognized $94 million as its share of the gain on this transaction. This gain is reported in the caption "Other income" on the Consolidated Statement of Income. In addition, PPG received a cash distribution of approximately $41 million from PGW to offset PPG’s expected income tax liability associated with this sale. The pre-tax gain and the cash distribution are both reported within the "Equity affiliate earnings, net of distributions received" caption on the Consolidated Statement of Cash Flows.