US PPG expands coatings business with SigmaKalon

12 March 2008 20:52  [Source: ICIS news]

HOUSTON (ICIS news)--US coatings company PPG Industries has expanded its geographic market and strengthened its coatings business with its €2.2bn ($3.4bn) acquisition of SigmaKalon, two ratings companies said on Wednesday.

SigmaKalon is a Dutch coatings company, which gives PPG a solid presence in the European coatings market, according to Standard and Poor's Ratings Service (S&P).

S&P assigned A- ratings PPG's two proposed unsecured notes, which the company will use to repay a €1bn bridge loan used to help fund the SigmaKalon acquisition.

Moody's Investors Service gave the PPG notes a A3 rating.

Moody's said the A3 rating reflects PPG's leading market position in its core business segments and its consistently strong earnings and cash flow generation.

In addition, PPG continues to emphasise growth strategies that are less sensitive to business cycles and that are not exceptionally capital intensive, Moody's said.

In addition, PPG will most likely spend any excess cash flow and divestiture proceeds on paying down debt, Moody's said.

S&P said its A- ratings reflect PPG's strong competitive positions in large coatings markets. In addition, the geographic diversity of PPG's sales also supported the A- ratings.

Overall, the SigmaKalon acquisition is a positive move for PPG's risk profile, in that it shifts the company's sales mix to that of a coatings company, S&P said.

SigmaKalon also doubles PPG's European coatings sales, and gives the company a solid presence in the continent's architectural coatings market, S&P said.

($1 = €0.65)

By: Al Greenwood
+1 713 525 2653

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