PG Industries (PPG) Commences Split-Off Exchange Tied to Eagle Spinco Merger

December 27, 2012 1:34 PM EST Send to a Friend
PG Industries (NYSE: PPG) today announced that it has commenced its exchange offer related to the split-off transaction of its commodity chemicals business. The split-off transaction is in connection with the separation and merger of Eagle Spinco Inc., a wholly-owned subsidiary of PPG that will own substantially all of the assets and liabilities of PPG’s commodity chemicals business, with a subsidiary of Georgia Gulf Corporation (NYSE: GGC). As previously announced, PPG entered into definitive agreements as of July 18, 2012, to separate and merge its commodity chemicals business with Georgia Gulf.

Key elements of the exchange offer:

* PPG shareholders have the option to exchange all, some or none of their shares of PPG common stock for shares of Eagle Spinco common stock, subject to proration as described below. Shares of Eagle Spinco common stock will convert automatically into the right to receive shares of Georgia Gulf common stock at the closing of the merger of a Georgia Gulf subsidiary with and into Eagle Spinco, which is expected to occur promptly after completion of the exchange offer.
* Tendering PPG shareholders are expected to receive approximately $1.11 of Georgia Gulf common stock for every $1.00 of PPG common stock tendered, subject to the upper limit described below.
* PPG will determine the prices at which shares of PPG common stock and shares of Eagle Spinco common stock (and ultimately Georgia Gulf common stock) will be exchanged by reference to the simple arithmetic average of the daily volume-weighted average prices of PPG common stock and Georgia Gulf common stock, respectively, on the New York Stock Exchange on each of the last three trading days of the exchange offer.
* PPG currently expects to issue approximately 35,236,010 shares of Eagle Spinco common stock in the exchange offer. The exact number of shares of Eagle Spinco common stock to be issued will be equal to the greater of 35,200,000 or 1.02020202 times the number of shares of Georgia Gulf common stock outstanding immediately prior to the merger. The number of shares of PPG common stock that will be accepted in the exchange offer will depend on the final exchange ratio, the number of shares of Eagle Spinco common stock offered and the number of shares of PPG common stock tendered. Based on recent trading prices of the PPG common stock and the Georgia Gulf common stock, and assuming the issuance of 35,236,010 shares of Eagle Spinco common stock, if the exchange offer were fully subscribed, approximately 9,973,679 shares of PPG common stock would be accepted for exchange in the exchange offer.
* The exchange offer and withdrawal rights are scheduled to expire at 8:00 a.m., New York City time, on January 28, 2013, unless the exchange offer is extended or terminated.

The exchange offer is designed to permit PPG shareholders to exchange their shares of PPG common stock for shares of Eagle Spinco common stock at a discount of 10 percent to the per-share value of Georgia Gulf common stock, subject to a limit of 3.9745 shares of Eagle Spinco common stock per share of PPG common stock. Each share of Eagle Spinco common stock will then convert automatically into the right to receive one share of Georgia Gulf common stock following the merger of the Georgia Gulf subsidiary with and into Eagle Spinco. The shares of Georgia Gulf common stock issued in the merger are expected to represent approximately 50.5 percent of the Georgia Gulf common stock that will be outstanding after the merger.

If the exchange ratio limit of 3.9745 shares of Eagle Spinco common stock per share of PPG common stock is reached as of the initial expiration of the exchange offer, then the exchange offer will be subject to a mandatory extension of two trading days, as described in the exchange offer materials being sent to PPG shareholders.

The final exchange ratio showing the number of shares of Eagle Spinco common stock that PPG shareholders participating in the exchange offer will receive for each share of PPG common stock accepted for exchange will be announced by news release no later than 4:30 p.m., New York City time, on the last trading day prior to the expiration date (unless the exchange offer is extended). The exchange offer will expire at 8:00 a.m., New York City time, on January 28, 2013, unless terminated or extended, and the closing of the merger of the Georgia Gulf subsidiary with and into Eagle Spinco is expected to occur promptly after completion of the exchange offer. The transactions are subject to customary closing conditions, including Georgia Gulf stockholder approval. Georgia Gulf has scheduled a special meeting of shareholders to be held on January 10, 2013, to approve the issuance of Georgia Gulf common stock in the transaction. As a result of the exchange offer, the number of PPG’s outstanding shares will be reduced.

The exchange offer will be subject to proration if the exchange offer is oversubscribed, and the number of shares PPG accepts in the exchange offer may be fewer than the number of shares tendered.

If the exchange offer is consummated but not fully subscribed, then the remaining shares of Eagle Spinco common stock owned by PPG will be distributed as a pro rata dividend to PPG shareholders whose shares of PPG common stock remain outstanding and have not been accepted for exchange in the exchange offer. A PPG shareholder who validly tenders (and does not properly withdraw) shares of PPG common stock in the exchange offer will have such shares of PPG common stock exchanged for shares of Eagle Spinco common stock in the exchange offer and, accordingly, will waive any rights with respect to such shares of PPG common stock to receive shares of Eagle Spinco common stock distributed on a pro rata basis to PPG shareholders who have not exchanged their shares of PPG common stock in the exchange offer.


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