PPG Shareholders: Beware Of Georgia Gulf Exchange Offer
In my 49 years of investing, including a 30-year institutional investment career, I cannot recall seeing such a convoluted, contrived, shareholder-unfriendly corporate action. What started last year as a simple sale by PPG (PPG) of its commodity chemicals business to Georgia Gulf (GGC) for $2.1 billion has become a complicated, uncertain exchange offer – one in which PPG shareholders act as Georgia Gulf’s financiers by exchanging their PPG shares for newly minted GGC shares on uncertain terms.
This offer, besides being confusing, is disingenuous, enticing PPG shareholders with a specious 10% discount on the new GGC shares. This “free money” comes from the pockets of the GGC shareholders through dilution. Worse, the 10% probably will shrink or disappear once the new, bloated GGC (with twice the number of shares outstanding) begins trading. This shrinkage will be exacerbated by short-term traders looking to take advantage of a hoped-for quick pop.
Here are the problems and what to do…
This article is published on SeekingAlpha.com
