PPG Industries announced a definitive agreement to sell its architectural coatings business in the U.S. and Canada to American Industrial Partners for a transaction value of $550 million. This divestiture, expected to close in late 2024 or early 2025, is part of PPG's strategy to optimize its portfolio by focusing on businesses with stronger growth and margin opportunities.
The divested business represented approximately $2 billion of PPG's total net sales in 2023 and had a low-single-digit EBITDA margin. PPG stated that, on a three-year pro forma basis, excluding this business would have improved overall company sales volume results by over 200 basis points and the Performance Coatings segment operating EBIT margin by approximately 300 basis points in 2023.
In conjunction with the divestiture, PPG also announced a comprehensive cost reduction program targeting approximately $175 million in annualized pre-tax savings once fully implemented, with $60 million expected in 2025. This multi-year program aims to reduce structural costs, primarily in Europe and other global businesses, and includes various facility closures and approximately 1,800 job cuts in Europe and the U.S.
PPG expects to record a pre-tax charge of approximately $250 million in the fourth quarter of 2024 related to this restructuring. These self-help actions are designed to adjust the company's fixed cost base and right-size the organization following the architectural coatings and silicas products business divestitures, without impacting ongoing investments in organic growth.
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