PITTSBURGH _ PPG has put its failed attempts to acquire Dutch paints maker AkzoNobel "in the rear view mirror" and is moving ahead with other options to grow its business, the global coatings company's chairman said Thursday.
In a conference call with analysts after Pittsburgh-based PPG released second-quarter earnings, Michael McGarry, the company's chairman and chief executive, declined to comment on Akzo's announcement earlier this week that its chief executive, Ton Buchner, was stepping down because of health reasons.
PPG on June 1 walked away from a three-month effort to buy Akzo after Buchner and other top Akzo managers declined to negotiate a deal. PPG had raised its bid three times and its final offer of $29 billion for the Amsterdam-based maker of Dulux and other paints brands would have created the largest coatings company in the world.
Asked about Buchner's resignation during the analysts' call, McGarry said PPG would not discuss it and the company is "looking forward to growing our business."
Under Dutch financial regulations, PPG can submit another bid for Akzo in December.
McGarry didn't hint at whether PPG would again pursue a deal with Akzo but noted that the company earlier Thursday announced an agreement to buy The Crown Group, a coatings application business based in Warren, Mich.
Terms were not disclosed. The company has annual sales of between $125 million and $150 million, McGarry said.
Crown Group is owned by private equity firm High Road Capital Partners.
The deal fits into PPG's previously announced strategy to deploy between $2.5 billion and $3.5 billion this year and next year on acquisitions and share repurchases.
"We are now targeting the upper-end of that range at a minimum," said McGarry. "The acquisition pipeline remains solid."
After missing analysts' estimates for second-quarter revenues, shares in PPG fell 6 percent _ _ the biggest drop in the stock in nine months.
PPG closed at $106.72, down $6.88.
Analysts said both PPG and rival coatings company Sherwin-Williams _ which also reported earnings Thursday morning _ had sluggish demand for paint at home improvement chains.
"Sales to big-box retailers are weaker for both of them," said Christopher Perrella, an analyst for Bloomberg Intelligence.
Sales for the quarter edged up by about 1 percent to $3.8 billion on slightly higher prices that PPG said reflected increased raw material costs. But volumes overall were flat and sales also took a hit from unfavorable foreign exchange rates.
Net income for the quarter rose to $504 million, or $1.95 share, up 49 percent from $339 million, or $1.25 per share in the year-ago period.
Adjusted income of $472 million, or $1.83 per share, was up about 6 percent from a year ago and beat analysts' average estimate of $1.82 per share.
Adjusted income included an after-tax gain of $24 million on the sale of a Mexican wallboard unit and other legal and transaction costs.
While McGarry said industrial paints sales and sales in PPG-owned paints stores in the U.S. were strong, he acknowledged there was softer demand for PPG brands sold in large, big-box home improvement chains.
While the company-owned stores primarily sell to contractors, he attributed the slowdown in the do-it-yourself market in part to more baby boomers hiring contractors for their residential paint jobs and fewer millennials purchasing homes.
Also Thursday, PPG said Gary Heminger, chairman and chief executive of Marathon Petroleum Corp., joined its board of directors effective immediately.
