Owens Corning to Acquire Saint-Gobain's Reinforcement and Composites Business
July 27 2007 - 1:52AM
PR Newswire (US)
Converts previously announced joint venture agreement into outright
acquisition TOLEDO, Ohio, July 27 /PRNewswire-FirstCall/ -- Owens
Corning (NYSE:OC) today announced the signing of a definitive
agreement under which Owens Corning will acquire Saint-Gobain's
Reinforcement and Composites business for $640 million. The
acquisition further builds Owens Corning's position as a market
leader in glass reinforcements and composites. In 2006, the
acquired Saint-Gobain Reinforcement and Composites business had
sales of approximately $900 million, with approximately 4,500
employees. With this acquisition, the expanded Owens Corning
Composite Solutions business will have 42 production facilities in
16 countries. On a pro forma basis for calendar year 2006, the new
Owens Corning Composite Solutions segment would have had about
9,000 employees and combined sales of approximately $2.2 billion,
compared with actual reported segment sales in 2006 of $1.6
billion. The transaction is expected to close by the end of 2007
and remains subject to regulatory approval in several
jurisdictions, along with customary closing conditions. Owens
Corning will divest its facilities in Battice, Belgium; Birkeland,
Norway; and Huntingdon, Penn., in order to address regulatory
concerns related to the transaction. The Wichita Falls, Texas,
facility of Saint-Gobain is not part of the transaction. "This is a
transformational acquisition for Owens Corning," said Dave Brown,
Owens Corning president and chief executive officer. "This
acquisition expands Owens Corning's footprint around the world and
strengthens our position in key markets such as Russia, China,
India, Mexico and Brazil. It also brings talented people and proven
technology to Owens Corning, and it balances our exposure to the
cyclical downturns associated with the residential construction
market in North America. Composite Solutions is a core business at
Owens Corning and we are committed to its continued growth." "Glass
fiber markets are global, diverse and growing at two-times global
GDP," said Mike Thaman, Owens Corning chairman and chief financial
officer. "This strategic acquisition extends our global reach to
commercial and industrial markets of interest and expands our
global presence in a capital- efficient way that adds near- and
long-term value to shareholders." Chuck Dana, the president of
Owens Corning Composite Solutions business, said, "This acquisition
will accelerate the ability of Owens Corning to grow with our
customers in both developed and high-growth emerging markets.
Customers will benefit from an expanded product range, world-class
applied materials technology, improved logistics and supply
capability. Moreover, Owens Corning will own a growing global
fabrics business." Rationale and Benefits of the Transaction --
Accelerates the Composite Solutions business strategy and timetable
to improve financial performance of that business, while providing
greater economic value to Owens Corning. Substantial synergies are
expected and will be further detailed in Owens Corning's Aug. 1
announcement of second quarter 2007 business results. -- Enhances
Owens Corning's presence in fast-growing emerging markets around
the world, increasing the share of Owens Corning revenue from
international, commercial and industrial sources, while adding
balance to the company's revenue sources. -- Profitably grows the
company's global exposure to non-residential markets and positions
the Owens Corning brand in markets where the company does not have
a building materials presence. -- Simplifies the management and
governance structure compared with the previously proposed 60/40
joint venture structure, while speeding the integration process
with greater clarity for employees of both organizations.
Transaction Details Under the terms of the transaction, which has
been approved by the board of directors of both companies, Owens
Corning will acquire Saint-Gobain's Reinforcement and Composites
business for $640 million. The acquired business is comprised of 20
plants, which includes 12 glass fiber reinforcements plants, six
fabrics plants and two plants that produce both reinforcements and
fabrics. The Wichita Falls, Texas, facility of Saint-Gobain is not
part of the transaction. The acquisition, net of the planned
divestitures, increases Owens Corning's installed glass fiber
manufacturing capacity in the Composite Solutions segment by
500,000 tons, bringing the company's combined installed capacity to
1.3 million tons annually, 25 percent of which is in developing
countries and emerging markets. This transaction includes the
acquisition of a specialty fabrics business that is complementary
to and provides geographic expansion for Owens Corning's existing
fabrics business. This business includes weaving and knitting
operations of glass fiber. These woven and knit fibers are then
used to produce composite products that provide strength,
flexibility and durability in the wind energy, marine, industrial,
automotive and piping markets. This fabrics business also will
provide innovative materials technology for markets including solar
panels, ballistics and carbon fiber products. The acquired business
currently leases certain metals used in its production tooling. At
current market prices, the leased metals would be valued at
approximately $320 million. On an ongoing basis, Owens Corning
expects to meet its requirements for such leased metals from a
variety of sources, which could include existing Owens Corning
tooling, purchase, lease or some combination. Owens Corning
anticipates substantial annual pre-tax cost synergies, which will
be further detailed in the company's Aug. 1 announcement of second
quarter 2007 business results. Synergies will primarily come from
reduced operating costs, improved energy efficiency in furnaces and
sourcing. The acquisition will be funded by a combination of
proceeds of previously announced divestitures, cash on hand, cash
flow from operations, and Owens Corning's existing credit facility.
Citi acted as exclusive financial advisor to the company for the
transaction. Management and Reporting The expanded organization
will become part of the existing Owens Corning Composite Solutions
segment, which will continue to be led by Chuck Dana, currently
president of Owens Corning's Composite Solutions business. About
Owens Corning Owens Corning is a world leader in building materials
systems and composite solutions. A Fortune 500 company for more
than 50 years, Owens Corning people redefine what is possible each
day to deliver high-quality products and services ranging from
insulation, roofing, siding and stone, to glass composite materials
used in transportation, electronics, telecommunications and other
high-performance applications. Founded in 1938, Owens Corning is a
market-leading innovator of glass fiber technology with sales of
$6.5 billion in 2006 and 19,000 employees in 26 countries.
Additional information is available at
http://www.owenscorning.com/. About Saint-Gobain Saint-Gobain Group
specializes in the design, production and distribution of
functional materials for the construction, industrial and consumer
markets. The Group is organized into five business sectors: Flat
Glass, Packaging, Construction Products, Building Materials
Distribution, and High-Performance Materials. Established in more
than 50 countries, Saint-Gobain is the market leader in each of its
core businesses. In 2006, it achieved more than euro 40 billion
sales with around 200,000 employees. Forward Looking Statements
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected in these statements. Further information on
factors that could affect the company's financial and other results
is included in the company's Forms 10-Q and 10-K, filed with the
Securities and Exchange Commission. DATASOURCE: Owens Corning
CONTACT: Media, Jason Saragian, +1-419-248-8987, or Investors,
Scott Deitz, +1-419-248-8935, both of Owens Corning Web site:
http://www.owenscorning.com/ Company News On-Call:
http://www.prnewswire.com/comp/677350.html
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