Pilkington plc Proposed Acquisition of Nippon Sheet Glass Shareholdings in Pilkington Subsidiaries
25 May 2000
Pilkington plc Proposed Acquisition of Nippon Sheet Glass Shareholdings in Pilkington Subsidiaries
ST. HELENS, England, May 25 The Pilkington Group
("Pilkington") has today reached agreement with the Nippon Sheet Glass Group
("NSG") to acquire NSG's interests in the following Pilkington subsidiaries:
* Libbey-Owens-Ford Co. ("LOF"): the acquisition of NSG's 20 percent.
shareholding in LOF.
* L-N Safety Glass ("LNS") and L-N of America ("LNA"): the acquisition of
NSG's 50 percent. shareholding in LNS and LNA, both affiliates of LOF.
* Pilkington Automotive UK ("Triplex"): the acquisition of NSG's 20 per
cent. shareholding in Triplex.
Further details on each of these companies can be found in the Notes to
Editors.
The transaction will give Pilkington full operational control of these
automotive glass businesses, greater flexibility in implementing its North
American restructuring program and in continuing to exploit opportunities for
profitable change in Europe, thereby securing the full benefits of these
efforts for all shareholders.
Under the terms of the agreement:
* Pilkington will issue to NSG 122.2 million Pilkington ordinary shares
representing 10 percent of Pilkington's enlarged share capital. The
shares issued to NSG will rank pari passu in all respects with
Pilkington ordinary shares except that they will not be entitled to the
final dividend in respect of the year ended 31 March 2000, to be paid in
August 2000.
* NSG will pay to Pilkington $7.5 million in cash.
* Certain commercial and financial arrangements related to the joint
venture companies, which resulted in the payment of approximately 3.5
million pounds sterling to NSG in the year to March 2000 and which were
expected to increase, will cease.
* Pilkington and NSG will continue to co-operate in the supply of
automotive glass products to their Japanese automotive customers around
the world. Furthermore the two Groups will maintain their joint
research and development programs covering automotive glass products and
processes worldwide, which have been in existence for over ten years.
* NSG will retain the shares as a long term strategic investment and has
entered into a standstill arrangement with Pilkington. Under the terms
of the standstill, NSG has undertaken not to sell the Pilkington shares
for a period of three years.
The transaction is expected to be earnings neutral in the year to March
2001, before taking into account the operational benefits arising from full
integration of the businesses within Pilkington's global network. Commenting
on the transaction, Paolo Scaroni, Pilkington Chief Executive, said:
"This transaction with NSG gives us full control over these important
businesses and provides us with flexibility to optimize sales and production
decisions within North America, within Europe and worldwide. It enables
Pilkington shareholders to receive all the benefits flowing from our Step
Change Programme and strengthens our excellent working relationship with NSG,
whose decision to take Pilkington shares is a significant vote of confidence
in our company and its prospects."
Benefits of the transaction
In the last five years the organizational structure and management of
Pilkington's businesses, particularly the automotive glass businesses, have
become increasingly pan-continental and global. As a consequence, the
existence of a minority shareholder in specific geographic companies has
become less and less suitable and has inhibited complete operational
integration and optimal location of production across all the automotive glass
plants and businesses. The Pilkington Board believes that the transaction
brings the following benefits:
* The ability to take full operational and financial control of the
relevant operating companies.
* The opportunity to secure the full benefit of the Step Change Programme
for all Pilkington shareholders.
* Maintenance of the existing commercial relationships with NSG, enabling
both Groups to further the development of world leading automotive glass
products and manufacturing processes, and to service their Japanese
customers around the world.
* Reinforcement of the two Groups' joint R&D strategy.
Timetable
In view of the existing relationship between Pilkington and NSG, the
transaction is classified as a related party transaction under the Listing
Rules of the UK Listing Authority and is therefore conditional upon the
approval of Pilkington shareholders. A shareholder circular and notice
convening an Extraordinary General Meeting of Pilkington seeking such approval
will be dispatched in due course.
It is currently expected that the Extraordinary General Meeting will take
place on 20 July 2000, immediately following Pilkington's Annual General
Meeting.
Salomon Brothers International Limited ("Schroder Salomon Smith Barney"),
which is regulated in the United Kingdom by The Securities and Futures
Authority Limited, is acting for Pilkington and no one else in connection with
the transaction and will not be responsible to anyone other than Pilkington
for providing the protections afforded to customers of Schroder Salomon Smith
Barney or for providing advice in relation to the transaction. Schroder is a
trademark of Schroders Holdings plc and is used under license by Salomon
Brothers International Limited.
Further information:
Paolo Scaroni, Group Chief Executive
Andrew Robb, Finance Director
Pilkington plc
Tel: 01744 692786
James Bardrick
Iain Robertson
Andrew Michelman
Schroder Salomon Smith Barney
Tel: 020 7658 6000
Nick Wiles
Piers Coombs
Cazenove & Co.
Tel: 020 7588 2828
Rupert Younger
Charlotte Festing
Finsbury Ltd.
Tel: 020 7251 3801