Fitch Comments on PPG's Proposed Acquisition of AkzoNobel's NA Architectural Coatings Business

  Fitch Comments on PPG's Proposed Acquisition of AkzoNobel's NA Architectural
  Coatings Business

Business Wire

NEW YORK -- December 14, 2012

PPG Industries, Inc. (NYSE: PPG) announced today that it has signed a
definitive agreement to acquire the North American architectural coatings
business of AkzoNobel N.V. (AkzoNobel) for $1.05 billion, including the
assumption of $175 million of liabilities. The transaction is expected to
close during the second quarter of 2013.

AkzoNobel's North American architectural coatings business is the second
largest in the United States and has a leading market position in Canada. This
business had $1.5 billion of sales during 2011, with roughly 60% derived from
the U.S. and the remaining 30% and 10% from Canada and the Caribbean. Similar
to PPG's U.S. architectural coatings business, AkzoNobel has strong
participation in all three distribution channels. AkzoNobel has 600
company-owned stores and also markets its products through major national home
centers and independent distributors.

The combined operations will increase PPG's company-owned stores from 400 to
roughly 1,000 and expands the company's branded paint product offerings to a
total of more than 8,000 retail outlets and 6,000 independent distributors.
Additionally, the acquisition will improve the global balance of PPG's
architectural coatings sales, expanding the company's North American position
to a slightly larger size than Europe, the Middle East, and Africa.

This acquisition is consistent with management's strategy of further
transforming PPG into primarily a coatings and specialty products company.
Furthermore, the acquisition is in line with Fitch's expectation that PPG will
pursue suitable acquisition opportunities to replace lost revenue, EBITDA and
cash flow from the pending separation of its commodity chemicals business.

PPG expects to pay $875 million of cash for the acquisition, which will be
funded by existing cash on hand. In addition, the company also announced that
it will reinitiate its share repurchase program immediately following the
completion of the separation of its commodity chemicals business. The company
expects to repurchase $500 million-$750 million of stock during 2013. PPG also
has $600 million of senior notes that mature in March 2013.

Fitch believes that the company will fund the expected $2 billion to $2.5
billion of cash outflows with cash on hand. At Sept. 30, 2012, PPG had $1.39
billion of cash and $619 million of short-term investments. The company's cash
position will be further increased next year with the expected receipt of $900
million of cash from the separation of its commodity chemicals business, which
is expected to close during the first quarter of 2013.

Fitch expects to meet with the management team in the next few weeks to
further review the acquisition, management's strategy to integrate the
operations and the company's liquidity profile following the planned
transactions.

Fitch currently rates PPG with a Stable Outlook as follows:

--Long-term IDR 'A-';

--Senior unsecured debt 'A-';

--Unsecured revolving credit facility 'A-';

--Short-term IDR 'F2';

--Commercial paper 'F2'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 8, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

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Contact:

Fitch Ratings
Primary Analyst:
Robert Rulla, CPA, +1-312-606-2311
Director
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst:
Robert Curran, +1-212-908-0515
Managing Director
or
Committee Chairperson:
Craig Fraser, +1-212-908-0310
Managing Director
or
Sandro Scenga, +1-212-908-0278
Media Relations, New York
sandro.scenga@fitchratings.com
 
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