Acquisition of Pilkington
On 16 June 2006, Pilkington and Nippon Sheet Glass announced that the Scheme of Arrangement had been implemented and that Pilkington is now a member of the NSG Group.
Compelling transaction rationale
Creates a global glass company optimally positioned to service the needs of its global customer base
Transformational transaction
- Two regional players combined to create a leading global force
- Geographical complementary across developed and emerging markets
- Co-ordinated global approach to the fast growing Japanese automotive OEMs
Economies of scale and global reach
- Positioned as a long-term winner in the global flat glass industry
- Increased resilience to sector/geographical challenges
Best practices and benchmarking
- Combination of best practices, R&D capabilities and customer/product strengths of both companies creates exceptional platform for the enlarged entity
Historical relationship and cultural fit allowing smooth integration
- Existing long term relationship provides a strong base for smooth integration post combination
- Stability of management structure, with Pilkington’s key management members committed to run Pilkington operations post transaction
Value creation and managed risk
Value creation to shareholders
- Attractive global long-term growth forecasts:
- Building products: 4.9-5.9%1
- Automotive: 3.4-3.7%1 - Strong cash generation capabilities of Pilkington
- A number of further longer term cost and revenue synergies are expected to be achieved in purchasing, procurement, and cooperative production
Note:
1 Global average, NSG estimate
Managed risk
- Well balanced financing structure utilising combination of debt, equity and internal resources
- Expected to maintain investment grade rating
- Leverage expected to decrease rapidly over time
Historical relationship between NSG and Pilkington
| 1918 | Establishment of NSG. Initially established as a joint venture “Japan-America Flat Glass., Ltd.,” invested by LOF (US) - NSG preserved dividend for LOF during the Second World War. Later, NSG acquired LOF’s equity stakes under LOF’s request |
|---|---|
| 1964 | NSG implemented the float glass manufacturing process - developed by Pilkington (first introduction into Japan) |
| 1974 | NSG established LNS in Mexico (a 50:50 joint venture for automotive AGR manufacturing with LOF) |
| 1986 | Pilkington acquired LOF |
| 1987 | Pilkington and NSG entered into a RD&E Agreement in automotive glass field (global alliance) |
| 1987 | NSG established ULNG to manufacture and market automotive OE in Kentucky (a 50:50 joint venture with LOF) |
| 1990 | NSG acquired 20% stake in LOF |
| 1993 | NSG acquired 20% stake in Triplex, Pilkington’s automotive glass unit in UK |
| 2000 | NSG acquired a 10% stake in Pilkington, in consideration for 20% in LOF, 20% in Triplex and 50% in LNS, becoming Pilkington’s largest shareholder |
| 2001 | NSG acquired an additional 10% stake in Pilkington through the stock market, amounting to 20% interest of Pilkington |
| 2001-2006 | Joint research, development and engineering agreement for automotive products and processes and joint marketing approach to Japanese vehicle manufacturers |
LINK: Pilkington
http://www.pilkington.com/ (Link to Pilkington.com)