PPG Industries (NYSE:PPG) today announced that the final exchange ratio for its exchange offer for PPG common stock is set at 3.2562 shares of Eagle Spinco Inc. common stock for each share of PPG common stock validly tendered and not withdrawn pursuant to the exchange offer. This exchange ratio permits PPG shareholders to exchange their shares of PPG common stock for shares of common stock of Eagle Spinco Inc., a wholly-owned subsidiary of PPG that will own substantially all the assets and liabilities of PPG’s commodity chemicals business. After PPG’s acceptance of shares in the exchange offer, Eagle Spinco will merge with a subsidiary of Georgia Gulf Corporation (NYSE:GGC) and each share of Eagle Spinco common stock will convert automatically into the right to receive one share of Georgia Gulf common stock. As previously announced, PPG entered into definitive agreements as of July 18, 2012, to separate its commodity chemicals business and merge it with Georgia Gulf. The exchange offer will expire at 8:00 a.m., New York City time, on January 28, 2013, unless terminated or extended, and the closing of the Eagle Spinco merger is expected to occur after completion of the exchange offer. The transactions are subject to customary closing conditions. PPG is offering 35,249,104 shares of Eagle Spinco common stock in exchange for shares of PPG common stock. Based on the final exchange ratio, PPG will accept for exchange a maximum of 10,825,227 shares of PPG common stock. The upper limit of 3.9745 shares of Eagle Spinco common stock for each share of PPG common stock is not in effect. The exchange offer will be subject to proration if it is oversubscribed, and accordingly, the number of shares of PPG common stock accepted in the exchange offer may be less than the number of shares of PPG common stock tendered. If the exchange offer is consummated but not fully subscribed, PPG will distribute all of the shares of Eagle Spinco common stock it continues to own as a pro rata dividend to all PPG shareholders whose shares of PPG common stock remain outstanding and have not been accepted for exchange in the exchange offer.
Jefferies analysts note that recent construction spending data indicates a cycle rotation away from construction-exposed names and toward industrial- and durable goods-levered firms could be playing out.