Whilst the M&A scene has been busy in our industry in the UK over recent weeks, there is a deal being done over the pond in the States which dwarfs anything we’ve seen in our industry. I wouldn’t normally write about deals done overseas as they don’t really affect our own industry here. But the Vitro deal to purchase the flat glass operations of PPG is a whopper!
Vitro purchases PPG flat glass operations
In the past few days a deal has been agreed between Mexican-based glass makers Vitro and PPG of the US to buy their entire flat glass operations for belting $750m. The deal is expected to be completed by the end of this year.
Here’s some context of the two companies. Vitro are a Mexico’s largest glass makers, with a reported $882m in sales in 2015. In comments on the deal, it is clear their aim is to make progress into the US and Canadian markets.
PPG are an American based producer of paints, coatings, optical products, specialty materials, glass and fiber glass. They are listed on the NYSE. Established in 1883 which makes them over 130 years old and have operations around the globe. They have a reported $15.3bn in sales in 2015. This is most definitely the bigger of the two businesses.
The deal will see Vitro pay $750m in cash to PPG which will greatly grow the capabilities of the Mexican company.
The numbers involved with this sort of deal are mammoth in comparison to types of deals that are done back here. Size is relative however. The US glass markets are much bigger than ours, and so any deal to buy another company or assets of another company will always be bigger than deals done in our neck of the woods.
There is an interesting political angle to this deal though. As you know, there is an American Presidential election going on right now, and the Republican nomination Donald Trump has been very clear as to what he thinks about Mexico, their people, and their presence in the US.
He has vowed to build a wall and make Mexico pay for it. He has vowed to bring back jobs to Americans. I wonder what he would think of this kind of deal?
It does matter. Despite the many outrageous, ridiculous and un-Presidential things he has said, Donald Trump has a serious chance of winning the contest.
Could deals like this PPG purchase be a thing of the past if he came to power? Would he actually build that wall? There would be many questions to answer if he won power. And if you thought the stock market reaction was dramatic after the Brexit vote, it will pale into insignificance if Trump wins!
To get weekly updates from DGB sent to your inbox, enter your email address in the space below to subscribe: