Following the announcement of the Nippon Sheet Glass GBP 1.8 billion takeover of Pilkington, both firms have stressed that the UK-based group will retain its “brand and name” as one of the world“s le…
Following the announcement of the Nippon Sheet Glass GBP 1.8 billion takeover of Pilkington, both firms have stressed that the UK-based group will retain its “brand and name” as one of the world“s leading glassmakers and the group“s European HQ will stay at Prescot Road, St Helens, in north-west England. The companies say the deal is about combining glassmakers with strengths in the Japanese sector to make a global force in the industry. Assurances have been given to the 1,780-strong workforce at St Helens that there will be no job cuts locally nor will there be in any closure of any of the seven remaining sites, including the Lathom research facility, in the town. Indeed, a Pilkington spokesman suggested that NSG would invest to bring superior technology to the town“s glass plants. Pilkington will nevertheless become a subsidiary of NSG, a company about half its size. Under the deal, Pilkington chief executive Stuart Chambers will remain in charge of the firm“s European affairs and will lead the process of integrating the firms“ combined glass making activities. “The combination with NSG will expand our geographic reach and enhance Pilkington“s position as a global world class glass manufacturer”, Mr Chambers said. The Japanese firm currently holds around a 4% market share of the world sheet glass industry (building materials, automotive, and others) as opposed to Pilkington“ share of 11%. NSG, already Pilkington“s biggest shareholder with a 20% stake, expects the takeover to increase its market share to around 14%. In particular, it hopes the buy-out will improve its position in Europe, where Pilkington makes more than half its sales. The transaction will see NSG buy out the remaining 80% of the company at GBP 1.65 a share. However, with the transaction being financed mainly from loans of GBP 1.5 billion from British banks and convertible bonds, some analysts see the deal as risky both at a financial and management level. Unions in St Helens reacted cautiously to the news. George Patterson, regional organiser of the GMB union in St Helens, representing more than 1,000 Pilkington workers, said the staff anticipated little change but would be “seeking assurances from the company that the final salary pension scheme remains guaranteed under the new employer”. Meanwhile, Harry Howard, regional officer of manufacturing, technical and skilled persons“ union Amicus, said: “The company has given assurances all terms and conditions, including pensions will not be affected. Talks with the company will continue to ensure all areas of potential difficulty are fully explored”. “This is major issue when a long standing British Multinational faces takeover by a foreign company. The traditions of Pilkington have been good for the town and we can only hope that whatever the outcome of these takeover talks, the town of St Helens continues to be the Float Glass capital of the world”. Reports suggest that the Pilkington chairman of 11 years, Sir Nigel Rudd, will make GBP 4.25 million from the takeover. The planned timetable for the takeover procedure will see the posting of the scheme of arrangement document to Pilkington shareholders in March 2006, court hearing and extraordinary meeting of shareholders in April, with court approval, payment to shareholders and closure of the deal expected in late June 2006.