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Published: Tuesday, 2/28/2006

Pilkington is purchased by Japanese firm

BY MARY-BETH McLAUGHLIN
BLADE BUSINESS WRITER

A Japanese company looking for new markets has purchased the parent firm of a Toledo business that has been in the city's glass-making industry for more than 100 years.

Nippon Sheet Glass Co. Ltd. yesterday announced it would buy the much bigger Pilkington PLC for more than $3 billion. The deal would give Nippon its first presence in North America.

The transaction, which will require shareholder and regulatory approval, is expected to be finalized by late June.

The Pilkington name and local operations will remain, including the North American headquarters in downtown Toledo, a float-glass factory in the suburb of Rossford, a technology center in Northwood, and a small fire protection division in Toledo. Together, there are 600 employees in northwest Ohio.

A Pilkington spokesman said the company's name will not change, nor will its management team, and it will be operated as a subsidiary of Nippon.

"There's no specific impact that I can think of in the short run," said Simon Brown, a London analyst with Williams de Broe PLC. "In the general run of things, this deal gives Nippon the global reach that it doesn't have now."

Eighty-five percent of Nippon's revenues in its last fiscal year came from Japan, while Pilkington reports more than half of its sales are in Europe, a third are in North America, and the rest are from South America, Australia, and Asia.

Nippon, based in Tokyo, owns a 20 percent stake in the Pilkington of St. Helens, England, and made three bids to acquire the firm since Oct. 31. Each earlier bid was rebuffed. The latest bid is 30 percent higher than the original offer.

The acquisition will make Nippon a global leader in the building and vehicle glass industry, and triple its annual sales to about $6.5 billion, the firm said.

Pilkington has plants in 24 countries and shipped glass for 12 million vehicles in 2004. Pilkington has 24,000 employees worldwide, Nippon about half that.

The purchase provides Nippon with new markets for windshields and lowers its dependence on glass for television and computer monitors.

It will help the company compete with Asahi Glass Co., of Tokyo, the world's biggest glass company, in supplying Toyota Motor Corp. and other carmakers. The Japanese automakers are pushing suppliers to own plants around the world to help in their expansion plans.

"Asahi has strong sales routes into Japanese automakers, in particular Toyota, and Nippon Sheet's move is all about boosting sales to Toyota," analyst Yusuke Ando told Bloomberg News.

Another analyst called it a bold move by Nippon but questioned whether the purchase price was too high, or whether other bidders might come forward.

Under the terms, Nippon will pay $3 in cash for each Pilkington share, plus refinance the British firm's debts, for a total price of $5.3 billion. The Japanese company plans to use bank loans and will issue $941 million in stock to finance the deal.

Mr. Brown, the analyst, said the two companies know each other well because of Nippon's past ownership in Pilkington and because of a technology-sharing agreement in place.

But there is little overlap between them, and Toledo should be in a good position because it is the center of Pilkington's North America operations.

The deal marks the end of Pilkington as a company, which was founded in 1829. It invented float-glass manufacturing in the 1950s. It ranks No. 2 in the flat-glass market, with 15 percent of global capacity. Nippon is 11th largest.

The purchase is a new chapter in the history of a Toledo company that has its roots in the Edward Ford Glass Co., which opened a flat-glass plant in what is now Rossford in 1899.

That firm later became Libbey-Owens-Ford Co., a name that paid tribute to the three glass pioneers whose business lives were intertwined: Edward Drummond Libbey, Michael Owens, and Edward Ford.

Pilkington bought L-O-F's glass business in 1986 by exchanging 4 million shares of L-O-F stock that it had owned and assuming $70 million of L-O-F's debt. That price tag was estimated at more than $350 million.

In 2000, the British parent removed the famous names of Libbey, Owens, and Ford.

The company said at the time that it was changing the name to build better worldwide identity for its building and auto glass units.

Contact Mary-Beth McLaughlin at

mmclaughlin@theblade.com

or 419-724-6199.



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