Vitro Acquires PGW’s Original Equipment Automotive Glass Business

Glass Magazine
December 19, 2016
COMMERCIAL, RETAIL, FABRICATION : FLOAT GLASS NEWS

Vitro S.A.B. de C.V. has signed a definitive agreement to acquire the Pittsburgh Glass Works LLC automotive original equipment manufacturer glass business from LKQ Corp. for approximately $310 million, according to a Dec. 19 company announcement. In the deal, Vitro will acquire seven manufacturing plants, two satellite facilities and two float glass furnaces in the United States, one manufacturing plant in Poland, and an equity share in two joint ventures located in North America and China.

“We are very excited to have reached this agreement between LKQ and Vitro,” said Adrián Sada Cueva, CEO of Vitro, in the announcement. “The addition of PGW's original equipment business will enable us to serve a greater number of customers as well as increase our geographic coverage. PGW's state-of-the-art technology will enhance our efforts in innovation and technological development in the sector. We are confident that this acquisition will strengthen Vitro and will lay the foundation for creating a business with greater growth potential enhanced by the great talent of the employees of both companies.”

Prior to closing, LKQ Corp. will spin off and retain the aftermarket glass distribution business, which will not be part of the transaction. Additionally, as part of the deal, Vitro and LKQ agreed to enter into a multi-year purchase agreement whereby Vitro will supply LKQ’s aftermarket glass distribution business with an already agreed-upon volume, according to the announcement.

The deal marks Vitro’s second major acquisition of 2016. In October, the company finalized the purchase of PPG’s flat glass business, which included four manufacturing plants, a research and development center, and four distribution and fabrication facilities.

“We are pleased to have reached this agreement, our second acquisition in the year, which is complementary to the recent acquisition of the construction glass business from PPG. With this investment we will continue to strengthen our automotive glass division, a key business for Vitro, thus fulfilling our commitment to create value for our shareholders,” said Adrián Sada González, the chairman of the board of directors for Vitro.

On a pro forma basis based on 2015 fiscal year figures, the transaction, together with the recent acquisition of PPG's flat glass business, would have resulted in sales and EBITDA of $2.2 billion and $378 million, respectively, and a ratio of debt/pro forma EBITDA of 1.99 times, and a net debt/pro forma EBITDA ratio of 1.73 times.

The acquisition will be funded with $80 million cash and a $230 million loan from BBVA Bancomer, which was simultaneously signed with this agreement.

The transaction is subject to customary closing conditions and necessary regulatory approvals. Cleary Gottlieb Steen & Hamilton acted as legal advisor for Vitro in this transaction.