The PPG Industries Natrium plant and other portions of the Pittsburgh-based company's chemical business will merge with Atlanta-based Georgia Gulf in a $2.1 billion deal.
"The combined company will be a leading integrated chemicals and building products company that we believe will benefit from significant integration and scale, a broad portfolio of downstream products, as well as the regional advantage of low-cost North American natural gas," said Georgia Gulf President and Chief Executive Officer Paul Carrico.
"We are excited to work together with the talented employees of PPG's commodity chemicals business to combine our strengths and execute on the significant opportunities inherent in this transaction."
The merged company will have approximately 6,400 employees working at more than 40 facilities, primarily in North America. Information released did not indicate how local PPG employees would be impacted, though PPG officials indicated it would be "business as usual" for the local plant at least until the deal is closed, which is expected to come late this year or in early 2013.
The PPG Natrium plant-located north of Proctor along state Route 2-will change its name to Georgia Gulf. It manufactures chemicals, primarily chlorine, caustic soda, muriatic acid, and calcium hypochlorite. These chemicals have a wide variety of end-uses including water purification, paper and plastics production, and as key building blocks for pharmaceuticals.
The plant is also located right in the center of the burgeoning Marcellus and Utica shale natural gas boom, which Carrico referenced. As part of this, PPG last year signed a drilling lease with Gastar Exploration. PPG would gain about $50 million with Gastar drilling 30 wells on 3,300 acres of PPG land near the Natrium site.
PPG spokesman Jeremy Neuhart said prior to the deal's official closing the company cannot comment on the specifics of how the gas drilling deal with Gastar plays into the Georgia Gulf transaction.
Following the merger, the combined company is expected to have annual revenues of about $5 billion and be the third-largest chlor-alkali producer and second-largest vinyl chloride monomer producer in North America.
"This transaction is a natural strategic fit for Georgia Gulf that provides tremendous value for all stakeholders, including shareholders, customers, employees, and the communities in which we operate," Carrico added.
The specific terms of the transaction call for PPG to form a new company by separating its commodity chemicals business through a spinoff, then immediately merging the "new" business with Georgia Gulf.
The merger will give PPG shareholders approximately 50.5 percent of the shares of the merged company, with existing Georgia Gulf shareholders owning about 49.5 percent of the newly merged company.
"We are pleased to have reached this agreement, as this transaction is another major step in our strategic transformation into a more focused coatings and specialty products company," added PPG Chairman and Chief Executive Officer Charles E. Bunch. "This is a unique opportunity to create significant value for PPG shareholders and to share in synergies that would not be available to PPG's commodity chemicals business on its own."
The merged company will be led by Carrico and a senior management team comprised of both Georgia Gulf and current PPG commodity chemicals employees.
The board of directors will consist of the eight existing Georgia Gulf board members and three new members to be designated by PPG. The board will include Michael H. McGarry, senior vice president of PPG's commodity chemicals business, who will remain with PPG after the combination.