Japanese company Nippon Sheet Glass have reached an agreement to acquire
UK glass producer Pilkington in totality.
Nippon already own 20 percent of Pilkington and offered to purchase the
remainder for nearly £2 billion.
The deal brings to a close four months of negotiating between Nippon
Sheet and the Lancashire-based glass manufacturer who are over 170 years old
and employ close to 25,000 staff across the Midlands and North of England.
Nippon originally offered £1.59 per share but this was seen as too cheap
by the Pilkington executive board. They
eventually managed to hold out for an improved £1.66 offer.
As the agreement was made public last Friday, Nippon also revealed that
they would initiate plans for the issue of convertible stock that could raise a
billion dollars’ worth of funds.
Crack the competition
According to interested observers, the agreement will benefit Nippon
with huge savings due to the ability of the firm to tie-up its already existing
UK subsidiary NGF Europe with the headquarters of Pilkington, both of which are
located in the heart of Lancashire.
The acquisition will also provide Nippon with the clout to offer serious
competition to the glass manufacturing word leaders, most notably Japan’s
Asashi which currently covers about 25 percent of the world market. Pilkington
is a major takeover, itself accounting for about 20 percent of the global
market. Nippon currently has about 10 percent.
Michael Lane, Global Co-Head of the
Investment Management Division at Shizuoka Capital Wealth Management commented
on the takeover in a phone interview, “Japanese glass firms have been keeping a
very close eye on Pilkington. A few months ago they announced a 23 percent rise
in first half profits and have, in general, become more profitable and
economical over the last few years.”
Lane added, “The Nippon deal will allow Pilkington to branch out and
improve their position in the world market.”
