Swedlow to File Proposal in Dispute Over Takeover

Continuing a challenge of a Federal Trade Commission suit blocking its acquisition by PPG Industries, Swedlow Inc. said Tuesday it will file a proposal in federal court within the next week, seeking to allow PPG to proceed with its $42-million purchase of Swedlow’s stock while preserving Swedlow as a separate company.

On Feb. 21, U.S. District Judge Thomas Penfield Jackson issued a preliminary injunction against the proposed acquisition and ordered Garden Grove-based Swedlow and the FTC to prepare “hold and separate” orders by March 7. The judge then will consider the proposed orders in drafting the court’s decision. A “hold and separate” order would allow PPG to own Swedlow’s stock while requiring it to operate the company as a separate entity.

Jack Gold, senior vice president and attorney for Swedlow, said the proposed order he will submit to the district court in Washington would allow PPG to buy Swedlow’s stock--a move already approved by Swedlow’s stockholders--but keep Swedlow’s military aircraft transparency business separate from PPG’s commercial aircraft window business.

Swedlow will continue as an independent corporation with its own board of directors under terms of the proposal, and Gold said the company also will ask for preservation of the “business relations it currently has with PPG.” PPG now supplies certain types of glass to Swedlow and Swedlow has, in the past, sold acrylic sheets to PPG, Gold said.

Swedlow designs and sells aircraft windshields and canopies--generally made of plastic and intended for military aircraft. In a suit filed Jan. 6, the FTC contends that the proposed acquisition by PPG would substantially reduce competition in the aircraft window-manufacturing industry.

PPG, a major glass maker, also manufactures aircraft windshields, generally glass windows used in commercial aircraft. An industry analyst said the deal would increase PPG’s share of the worldwide aircraft window market from 45% to nearly 75%.

After the court decides on what form the final hold and separate order should take--Gold contends that the FTC will seek “very stringent conditions” in its proposed order--an administrative hearing will be held to determine whether the acquisition is anti-competitive.

Ann Guler, a spokeswoman for the FTC in Los Angeles, said the FTC claims that “if the acquisition went through, PPG would become the dominant firm in that industry, which, among other things, would make it possible for PPG and the other remaining firms to collude and possibly lower output or raise prices or both.”