Coatings giant PPG Industries ( PPG) has agreed to buy high-temperature-resistant and insulative coatings supplier Hi-Temp Coatings Technology Co., Inc. for an undisclosed price. The transaction, which is subject to customary closing conditions, is expected to consummate in first-quarter 2014.
Boxborough, Mass.-based Hi-Temp is a leading supplier of coatings that protect carbon steel and stainless steel substrates. Coatings supplied by the entity are widely used in refineries, petrochemical plants, pulp and paper mills, and power plants. Hi-Temp’s products include the industry-leading corrosion-under-insulation ( CUI) coating – HI-TEMP 1027 – which can be applied while equipment is hot and in operation, thereby reducing facility downtime during maintenance.
The addition of Hi-Temp’s products and technologies will reinforce PPG Industries’ protective and marine coatings business by offering a number of growth opportunities, notably in petrochemical space. The integration of Hi-Temp’s CUI coatings with PPG Industries’ legacy products will allow the latter with greater options to address its customers’ needs.
PPG Industries saw its profit jump in fourth-quarter 2013, reported on Jan 16, on strength in its coatings business and its cost management initiatives. Revenues rose by double digits on healthy momentum across aerospace and automotive markets. PPG Industries sees favorable market conditions across these end-markets in 2014.
PPG Industries has a diversified business, both in terms of products offered and geographical presence. It is a global leader in protective and marine coatings and has a leading position in several paints and coatings end markets.
PPG Industries is taking steps to grow its business inorganically by making a number of acquisitions. Moreover, the company is pursuing a $102 million business restructuring focused on achieving cost synergies associated with its takeover of AkzoNobel’s ( AKZOY) North American architectural coatings business.
However, PPG Industries may continue to face softness in Europe with weak economic activity and a still challenging demand environment. Moreover, the company remains exposed to raw material cost pressure and sluggishness across some of its key end markets.
PPG Industries is a Zacks Rank #2 (Buy) stock.