PPG Industries, Inc. reported it had come to an agreement to sell its 51% interest in Transitions Optical to its joint venture partner, Essilor International. Essilor International currently holds a 49% interest in the venture. Transitions Optical, a consolidated subsidiary of PPG, is an international supplier of photochromic lenses.
Essilor International, under the agreement, will obtain PPG's optical sunlens business unit and will also be entering into multi-year contracts with PPG. Essilor International will continue its research and development services and supply of optical dyes to PPG.
"Transitions has been an excellent growth catalyst for PPG for more than 20 years. However, the optical industry is changing rapidly, including the emergence of new technologies. The completion of this transaction will position Transitions as a core business within a leading global optical industry company. We are pleased with the enterprise value of the transaction, which reflects a valuation multiple midway between PPG's and Essilor's multiples, benefiting both parties. Additionally, PPG will remain an important supplier of optical materials to the industry, including to Essilor," chief executive and chairman of PPG Charles E. Bunch explained.
Mr. Brunch stated commenting on where they intend to use the capital, "We intend to redeploy the proceeds from the transaction in a timely manner on core business acquisitions and share repurchases. The earnings benefits from this cash deployment are expected to more than offset the reduced earnings from the Transitions Optical divestment. Additionally, we suspended share repurchase activity at the outset of the second quarter due to ongoing negotiations, and are now reinitiating repurchases targeting a range of US$500 to US$750 million for the year."
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