Acquisitions and Divestitures

Acquisitions

The Crown Group

On October 2, 2017, PPG acquired The Crown Group (“Crown”), a U.S.-based coatings application services business, which is reported as part of PPG's Industrial Coatings reportable segment. 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 year-ended December 31, 2017.

MetoKote Corporation

In July 2016, PPG completed the acquisition of MetoKote Corporation ("MetoKote"), a U.S.-based coatings application services business. MetoKote applies coatings to customers' manufactured parts and assembled products. It operates on-site coatings services within several customer manufacturing locations, as well as at regional service centers, located throughout the U.S., Canada, Mexico, the United Kingdom, Germany, Hungary and the Czech Republic. Customers ship parts to MetoKote service centers where they are treated to enhance paint adhesion and painted with electrocoat, powder or liquid coatings technologies. Coated parts are then shipped to the customer’s next stage of assembly. MetoKote coats an average of more than 1.5 million parts per day.

The following table summarizes the estimated fair value of assets acquired and liabilities assumed as reflected in the final purchase price allocation for MetoKote.



($ in millions)
Current assets		$38
Property, plant, and equipment	73
Identifiable intangible assets with finite lives	86
Goodwill	166
Deferred income taxes^(a)	(12		)
Total assets		$351
Current liabilities	(23		)
Other long-term liabilities	(22		)
Total liabilities		($45	)
Total purchase price, net of cash acquired		$306


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

The pro-forma impact on PPG's sales and 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. Since the acquisition, the results of this acquired business comprise the coatings services operating segment, included within the Industrial Coatings reportable segment.

Other Acquisitions

In 2017, 2016, and 2015, the Company completed several smaller business acquisitions. The total consideration paid for these acquisitions, net of cash acquired, debt assumed and other post closing adjustments, was $74 million, $43 million and $371 million, respectively.

In January 2018, PPG acquired ProCoatings, a leading architectural paint and coatings wholesaler located in The Netherlands. ProCoatings, established in 2001, distributes a large portfolio of well-known professional paint brands through its network of 23 multi-brand stores. The company employs nearly 100 people.

Divestitures

Glass Segment

In 2017, PPG completed a multi-year strategic shift in the Company's business portfolio, resulting in the exit of all glass operations which consisted of the global fiber glass business, PPG's ownership interest in two Asian fiber glass joint ventures and the flat glass business. Accordingly, the results of operations, including the gains on the divestitures, and cash flows have been recast as discontinued operations for all periods presented. PPG now has two reportable business segments.

The net sales and income from discontinued operations related to the former Glass segment for the three years ended December 31, 2017, 2016, and 2015 were as follows:



($ in millions)	2017		2016		2015
Net sales		$217		$908		$1,089
Income from operations		$23		$111		$137
Net gains on the divestitures of businesses	343		421		—
Income tax expense	138		202		42
Income from discontinued operations, net of tax		$228		$330		$95

North American Fiber Glass Business

On September 1, 2017, PPG completed the sale of its North American fiber glass business to Nippon Electric Glass Co. Ltd. (“NEG”). Cash 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.

The Company's December 31, 2016 consolidated 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 Glass segment included in the PPG 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 income taxes^(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. PPG received approximately $740 million in cash proceeds and recorded a pre-tax gain of $421 million on the sale. Under the terms of the agreement, PPG divested its entire flat glass manufacturing and glass coatings operations, including production sites located in Fresno, California; Salem, Oregon; Carlisle, Pennsylvania; and Wichita Falls, Texas; four distribution/fabrication facilities located across Canada; and a research-and-development center located in Harmar, Pennsylvania. PPG’s flat glass business included approximately 1,200 employees. The business manufactures glass that is fabricated into products used primarily in commercial and residential construction.

European Fiber Glass Business

In October 2016, PPG completed the sale of its European fiber glass business to glass manufacturer NEG. PPG recorded a pre-tax loss of $42 million, consisting predominately of a $46 million pension settlement charge. The European fiber glass business manufactures reinforcement materials for thermoset and thermoplastic composite applications for the transportation, energy, infrastructure and consumer markets. Manufacturing facilities in Hoogezand, Netherlands, and Wigan, England, and a research and development facility in Hoogezand were included in the transaction.

PFG Fiber Glass Joint Ventures

In November 2016, PPG sold its 50% ownership interests in its two PFG fiber glass joint ventures to its joint venture partner Nan Ya Plastics Corporation (“Nan Ya”). Nan Ya is affiliated with Taiwan-based Formosa Plastics Group. The PFG fiber glass joint ventures supply electronic yarn fibers used in integrated electronic circuit boards and fiber glass reinforcement products for automotive applications. PPG recorded a net pre-tax gain of $36 million on the sale.

Other Divestitures

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 $25 million pre-tax gain on the sale. The Company's consolidated balance sheet presents the assets and liabilities of the Plaka business as held for sale as of December 31, 2016.

Pittsburgh Glass Works

In April 2016, PPG sold its minority ownership interest in Pittsburgh Glass Works LLC ("PGW") to LKQ Corporation concurrent with the majority partner’s sale of its ownership interest. PPG recorded a pre-tax gain on the sale of $20 million. PPG accounted for its interest in PGW under the equity method of accounting. PPG’s share of net earnings from PGW are reported in “Other income” in the Consolidated Statement of Income for all periods presented and have not been reclassified as discontinued operations, as the divestiture of PGW does not represent a strategic shift in PPG’s operations and PGW did not have a major impact on PPG's ongoing results of operations.