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.
Comments by Senior management
Commenting on the Acquisition, Yozo Izuhara, Chairman and CEO of NSG, said:
“NSG with Pilkington produces a world leader of scale in the global Flat Glass industry. Employing 36,000 people, the enlarged company has annual sales of around ¥800 billion (£ 4 billion/$US 7.38 billion), manufacturing operations in 26 countries and sales in over 130, with ownership or interests in 50 float glass manufacturing lines worldwide and a widened Automotive customer base”.
Stuart Chambers, Group Chief Executive of Pilkington said:
“I am excited about Pilkington's future as part of the NSG Group. The new combined company is a global leader in glass.
Our joint technological strength, innovation and global reach mean we are well placed to grow profitably and to service and develop our customer base in all major markets worldwide”.
Transaction highlights
Strategically compelling transaction to strengthen NSG's core business
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)