Swedlow, a Garden Grove glass and plastics maker, called an end Monday to its yearlong effort to merge with PPG Industries and announced that it has now agreed to be acquired by a British conglomerate in a deal identically valued at $42.3 million.
The new agreement, expected to be signed today, would add Swedlow to the list of about three dozen subsidiaries worldwide of Pilkington Bros. PLC, a Merseyside, England, glass manufacturer that claims to have 18% of the world glass market.
Swedlow decided to abort its agreement with the Pittsburgh-based PPG because of past and expected future delays caused by a Federal Trade Commission court action designed to block the purchase on antitrust grounds, said Charles J. Deischter, Swedlow's president.
The FTC claimed the merger with the world's largest glass maker would lessen competition in the making of aircraft windshields, Swedlow's specialty. Administrative hearings were scheduled to continue this week, said Edward J. Slack, PPG's president.
Swedlow was concerned about the delay and was considering alternatives, Slack said, "but I had no idea (acquisition) discussions were going on with other parties."
Pilkington, whose products Swedlow has used for the last 10 years, approached Swedlow about six weeks ago with a nearly identical offer, Deischter said.
Slack said he was "disappointed" that the PPG deal had been called off. He could not say what action, if any, PPG might take.
Chairman Wants to Sell
Swedlow's chairman, David A. Swedlow, is 75 and "wants to get his financial situation in order," Deischter said. Swedlow and his former wife own 49% of the company, and both want to sell, Deischter said. Directors and officers own 2% to 3% of the company and also will sell, he said.
Under the agreement, Pilkington will get the Swedlows' proxy to vote in favor of selling the company to Pilkington at $32.60 a share if the sale is completed by the end of the year. That is the same amount offered by PPG.
However, if the sale is completed after Jan. 1, the price will jump to $33.40 a share, a provision that was not in the PPG deal. The same offer will be made to remaining shareholders.
Swedlow and its 770 employees will continue to operate in Garden Grove as a Pilkington subsidiary, said Jack Gold, Swedlow senior vice president and attorney.
Since it went public in 1971, Swedlow's stock had never traded for more than about $30 a share, and that occurred last year after the planned acquisition by PPG was announced. It quickly plummeted by more than $5 a share when the FTC said in December that it would oppose the sale.
In February, a U.S. District Court judge in Washington allowed PPG to own Swedlow's stock but required it to operate the company as a separate entity until the antitrust issue was resolved. An appellate court issued an injunction in August preventing PPG from acquiring the stock.
"That's when we got frustrated," Gold said.