Owens Corning and a top French competitor have tentatively agreed to combine fiber-glass production units, creating a Toledo-based joint venture with $1.8 billion in annual sales and 10,000 employees across the globe.
The new firm, which would be 60 percent owned by OC and 40 percent owned by manufacturing giant Saint-Gobain, is be called Owens Corning-Vetrotex Reinforcements. It will have offices at OC's downtown Toledo headquarters and in Europe.
The development, coupled with a key acquisition of a French stone veneer business announced this week, seem partly an attempt by Toledo's third-largest company to signal to financial markets and potential investors that it intends to re-emerge as a strong performer after six years under Chapter 11 bankruptcy protection.
"This is a commitment to our composites business," said Chuck Dana, who heads that unit. He is to be chief executive of the merged operation if the two sides are able to reach final agreement and the deal is approved by antitrust regulators in Washington, Brussels and elsewhere.
"We're the leader in the world," Mr. Dana explained. "We're going to merge with the No. 2 player in the world." He spoke shortly before he was to board a flight to France, where he was to meet with customers and officials of Saint-Gobain.
Florence Triou-Teixeira, a spokesman for Saint-Gobain in Paris, was unwilling to concede that OC's business is bigger than the French firm's. "We are the two leading companies and by joining forces it will make us stronger," she said.
OC bills itself as the company that invented fiber glass, which is fiberized glass that is combined with polymers to create strong, rigid plastics.
But today, building materials such as attic insulation, vinyl siding, and roofing shingles account for 80 percent of OC's $6.3 billion in annual sales. Those products are not involved in the deal.
Also unaffected are OC's Fabwell line, which produces exterior wall panels for recreational vehicles, and Veil Technologies, which manufactures an ingredient used to make products including drywall and asphalt shingles.
Each firm in the joint venture has about 5,000 employees and 20 plants. They manufacture fiber glass sold to manufacturers of products including auto parts, construction materials, boats, and windmills.
The new company would have plants across Europe, North and South America, and Asia. OC operations included in the deal produced $700 million in sales last year, according to financial reports.
The other top producers of fiber glass are PPG Industries, Pittsburgh, and Johns Manville, Denver.
Demand for so-called "glass reinforcements" is growing about 5 percent a year, OC officials said.
Officials of the Toledo company said it is too soon to say if the deal would lead to workforce reductions. But in a written statement, OC said the deal could lead to savings through plant improvements and reduced costs for distribution, purchasing, and administration.
No money will exchange hands. But under tentative plans, Saint-Gobain would have the option of offering to sell to OC its 40 percent stake in the joint venture after four years.
The two sides expect the transaction to be completed by early next year. OC hopes to emerge from bankruptcy, caused by multibillion-dollar asbestos liability, in late 2006.
Contact Gary Pakulski at:
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