FTC Will Try to Stop PPG Deal to Acquire Swedlow
In a move some industry analysts said will likely kill the proposed $42-million acquisition of Swedlow by PPG Industries, the Federal Trade Commission said Tuesday it plans to seek a court order to stop the deal.
An FTC spokesman said the proposed acquisition would “substantially reduce competition” in the aircraft window-manufacturing industry.
But executives from both PPG and Garden Grove-based Swedlow vowed to fight the FTC action.
Swedlow and PPG are the two largest firms in the aircraft window market. PPG, which is based in Pittsburgh, posted 1984 net income of $527 million while Swedlow reported fiscal 1985 net income of $1.9 million. Swedlow is a plastics manufacturer specializing in military and civilian aircraft windshields. PPG, a major glass maker, also manufactures aircraft windshields.
Blow to Swedlow
The FTC announcement is a blow to Swedlow, which has negotiated in fits and starts for 13 years to sell itself to PPG. An attorney for David Swedlow, the company’s 74-year-old founder, said Swedlow is anxious to sell because, at his age, he wants some time to himself.
News of the FTC action sent Swedlow’s stock plummeting $5.25 per share, to $24.50 in over-the-counter trading Tuesday, down from Monday’s closing price of $29.75.
The stock shot up $5.50 per share to a high of $28 after the proposed sale was announced in mid-August. Swedlow stock hit a record $30 per share on Dec. 4.
PPG shares were ahead 12.5 cents at $50.87 in trading Tuesday on the New York Stock Exchange.
Industry analysts say they were hardly surprised by the FTC announcement. “I had my doubts about this deal the day it was announced,” said Anne Wuesthoff, analyst at F. Eberstadt & Co., a New York brokerage house.
The proposed purchase would boost PPG’s aircraft window market share from a current 45% to nearly 75%, she estimated. Although Swedlow primarily makes the windows from acrylic sheets and PPG makes them mostly from glass, “an aircraft window is aircraft window, no matter what it’s made from,” Wuesthoff said.
Says They’re Wrong
But Swedlow insists that its critics--and the FTC--are wrong.
“The FTC’s vision of the market and our vision of the market are diametrically opposed,” said Jack Gold, senior vice president and attorney for Swedlow. “The fact is, Swedlow and PPG are not in a common arena. We supplement, but do not overlap each other in any way,” he said.
Gold bitterly complained that the FTC has not attempted to stop some of the multibillion-dollar mergers that have been completed during the past year, “yet here is a company with $40 million at stake and we run into problems like this.”
Nearly 20 companies now manufacture aircraft windows, Gold said. “We’ll have an uphill court fight, but we consider this (FTC decision) to be ludicrous.”
PPG also said it intends to slug it out in court with the FTC. “It is our intent to go ahead with the acquisition and defend against the FTC,” said Art Marino, the company’s communications manager.
