Acquisitions and Divestitures

9 Months Ended

Sep. 30, 2017

Acquisitions

The Crown Group

On October 2, 2017, PPG acquired The Crown Group (“Crown”), a U.S.-based coatings application services business, which will be reported as part of PPG's coatings services business unit beginning in the fourth quarter 2017. Crown is one of the leading component and product finishers in North America. Crown applies coatings to customers’ manufactured parts and assembled products at 11 U.S. sites. Most of Crown’s facilities, which also provide assembly, warehousing and sequencing services, are located at customer facilities or positioned near customer manufacturing sites. The company serves manufacturers in the automotive, agriculture, construction, heavy truck and alternative energy industries. Crown has annual sales of approximately $125 million.

Taiwan Chlorine Industries

Taiwan Chlorine Industries (“TCI”) was established in 1986 as a joint venture between PPG and China Petrochemical Development Corporation (“CPDC”) to produce chlorine-based products in Taiwan, at which time PPG owned 60 percent of the venture. In conjunction with the 2013 separation of its commodity chemicals business, PPG conveyed to Axiall Corporation ("Axiall") its 60% ownership interest in TCI. Under PPG’s agreement with CPDC, if certain post-closing conditions were not met following the three year anniversary of the separation, CPDC had the option to sell its 40% ownership interest in TCI to Axiall for $100 million. In turn, Axiall had a right to designate PPG as its designee to purchase the 40% ownership interest of CPDC. In April 2016, Axiall announced that CPDC had decided to sell its ownership interest in TCI to Axiall. In June 2016, Axiall formally designated PPG to purchase the 40% ownership interest in TCI. In August 2016, Westlake Chemical Corporation acquired Axiall, which became a wholly-owned subsidiary of Westlake. On April 11, 2017, PPG finalized its purchase of CPDC’s 40% ownership interest in TCI. The difference between the acquisition date fair value and the purchase price of PPG’s 40% ownership interest in TCI has been recorded as a loss in discontinued operations during the nine months-ended September 30, 2017.

Other

In January 2017, PPG completed the acquisition of DEUTEK S.A., a leading Romanian paint and architectural coatings manufacturer, from the Emerging Europe Accession Fund. DEUTEK, established in 1993, manufactures and markets a large portfolio of well-known professional and consumer paint brands, including OSKAR^® and DANKE!^®. The company’s products are sold in more than 120 do-it-yourself stores and 3,500 independent retail outlets in Romania. PPG also acquired certain assets of automotive refinish coatings company Futian Xinshi ("Futian"), an automotive refinish coatings company based in the Guangdong province of China. Futian distributes its products in China through a network of more than 200 distributors.

Divestitures

Glass Segment

On September 1, 2017, PPG completed the sale of its North American fiber glass business to NEG, which represents the culmination of a multi-year strategic shift in the Company's business portfolio, resulting in the exit of all glass operations. Accordingly, the results of operations, including the gain on the disposal, and cash flows for its former Glass reportable business segment have been recast as discontinued operations for all periods presented, which consists of the fiber glass business, PPG's ownership interest in two Asian fiber glass joint ventures and the flat glass business. PPG now has two reportable business segments.

The net sales and income from discontinued operations related to the former Glass reportable business segment for the three and nine months ended September 30, 2017 and 2016 were as follows:



	Three Months Ended September 30				Nine Months Ended September 30
($ in millions)	2017		2016		2017		2016
Net sales	$	50	$	285	$	217	$	828

Income from operations	$	5	$	38	$	23	$	109
Net gain on divestiture of North American fiber glass business	343		—		343		—
Income tax expense	131		11		138		32
Income from discontinued operations, net of tax	$	217	$	27	$	228	$	77

North American Fiber Glass Business

Pre-tax proceeds from the sale were $541 million, resulting in a pre-tax gain of $343 million, net of certain accruals and contingencies established in conjunction with the divestiture.

PPG’s fiber glass operations included manufacturing facilities in Chester, South Carolina, and Lexington and Shelby, North Carolina; and administrative and research-and-development operations in Shelby and in Harmar, Pennsylvania, near Pittsburgh. The business, which employed more than 1,000 people and had net sales of approximately $350 million in 2016, supplies the transportation, energy, infrastructure and consumer markets. In 2016, PPG completed the sale of its European fiber glass operations to NEG and divested its ownership interests in two Asian fiber glass joint ventures.

The Company's December 31, 2016 balance sheet has been recast to present the assets and liabilities of the North American fiber glass business as held for sale.

The major classes of assets and liabilities of the North American fiber glass business included in the PPG condensed, consolidated balance sheet at December 31, 2016 were as follows:



($ in millions)	December 31, 2016
Receivables, net	$	38
Inventory	32
Other current assets	1
Property, plant and equipment, net	151
Deferred tax asset ^(a)	(30		)
Other non-current assets	1
Assets held for sale	$	193
Accounts payable and accrued liabilities	52
Long-term liabilities	12
Liabilities held for sale	$	64

^(a)The net deferred income tax liability is included in assets held for sale due to the Company's tax jurisdictional netting.

Flat Glass Business

In October 2016, PPG completed the sale of its flat glass manufacturing and glass coatings operations to Vitro S.A.B. de C.V. For the three and nine months ended September 30, 2016, the results of operations of the flat glass business are presented as discontinued operations on the condensed consolidated statements of income and cash flows.

Plaka Business

In June 2017, PPG completed the sale of the assets of its Mexico-based Plaka plasterboard and cement-board business to Knauf International GmbH and recorded a pre-tax gain of $25 million during the nine months-ended September 30, 2017. The Company's balance sheet presents the assets and liabilities of the Plaka business as held for sale as of December 31, 2016.