Swedlow of Garden Grove Agrees to PPG Takeover
It took 13 years of on-and-off negotiations, but Swedlow Inc., a Garden Grove aircraft parts maker, finally agreed Wednesday to be taken over by PPG Industries Inc. of Pittsburgh in a cash deal valued at about $42.3 million.
“It was not a quick marriage,” noted Jack Gold, a Swedlow senior vice president and director. “But if you look down the pike, the deal gives each company the chance to develop products that it couldn’t do alone.”
In the acquisition, PPG, a glass, chemicals, and coating maker with $4.2 billion in sales last year, has gotten a company recognized for its advanced-technology acrylic and plastic materials. Swedlow, which in its fiscal year ended March 31 had sales of $46 million and net income of $1.9 million, makes aircraft windshields and canopies, primarily for the military.
Gold said the merger should allow the companies to develop products combining plastic and glass that the military needs for its advanced aircraft. “Right now each company is straining at the forefront of its technology to satisfy the demand for windshields and other defense products,” Gold said. “Together the companies should be able to handle the demand.”
The proposed deal calls for PPG to pay $32.60 for each share of Swedlow stock--$9.60 above the all-time high price of $23 reached Tuesday morning when trading was halted in advance of the acquisition announcement.
A PPG spokesman said he had “no idea” how the company arrived at its purchase price, and executives familiar with the deal could not be reached for comment late Wednesday.
However, Gold claimed the stock market had traditionally undervalued Swedlow shares because the company put its profits back into new-product research rather than paying high dividends. “PPG is paying what we consider to be the true value of the company,” said Gold, a cousin of founder David Swedlow and the owner of about 21,000 company shares.
Swedlow, 74, who founded the company in 1946, owns nearly 362,400 shares, or about 29% of the company, according to a proxy statement published last month.
The deal, which still requires approval from Swedlow shareholders and PPG directors, provides that Swedlow will continue operating in Garden Grove with its existing management and employees. Gold said the acquisition should be final by the end of the year.
Gold said the acquisition took 13 years to arrange because of both extended price negotiations and David Swedlow’s demand that his company continue to be operated as an independent unit in Garden Grove as terms of any merger or acquisition. And Gold said David Swedlow agreed to the latest proposal in part because of his age.
“With the passage of time, Mr Swedlow’s desires have changed,” Gold said. “There comes a time for everything to end.”
