Nippon Sheet Glass to strengthen ops in North America, China

Nippon Sheet Glass Co. (NSG) aims to leverage its acquisition of Pilkington PLC to strengthen its operations in North America and China, according to President Katsuji Fujimoto.
In particular, the co…

Nippon Sheet Glass Co. (NSG) aims to leverage its acquisition of Pilkington PLC to strengthen its operations in North America and China, according to President Katsuji Fujimoto. In particular, the company will boost its production and sales of automobile-related products on the two markets, where demand from Japanese automakers is expected to increase on the back of rising Japanese vehicle sales, Fujimoto indicated an interview. The announcement of the NSG acquisition of Pilkington for GBP 1.65 per share came at the end of February 2006. The successful bid followed the rejection by the Pilkington board of two previous offers. To enhance communications with Pilkington employees at all levels, NSG will set up a London headquarters for the integration, Fujimoto said. Fujimoto expressed confidence in the success of the acquisition, saying that NSG and Pilkington will benefit from each other“s strengths and lead the glass industry in technological and marketing expertise. The integration will produce synergies worth JPY 4.4 billion a year in four years“ time, through joint materials procurement, the restructuring of overlapping research and development operations, and realignment of their production footholds, he said. However, Fujimoto emphasised that synergies would be more significant in the long-term, adding that the group will spend around JPY 10 billion for research and development for future growth based on technological innovations. He dismissed worries that the total acquisition costs of JPY 616 billion, including those for refinancing Pilkington“s outstanding debts, could put a heavy financial load on the company. NSG will borrow about JPY 140 billion outside the group to finance the purchase, but the loans can be repaid in several years because Pilkington“s annual cash flow is estimated at JPY30 billion, he said.