Koch Acquires Full Ownership of Guardian Industries

November 21st, 2016 by Editor

Guardian Industries Corp. and Koch Industries, Inc., today announced that Guardian stockholders have approved the acquisition of the company by KGIC Merger Corporation, a wholly owned subsidiary of Koch Industries. The deal is an all-cash transaction for the remaining 55.5 percent outstanding shares of Guardian Industries’ common stock not already owned by affiliates of Koch.

“Guardian Industries and its employees have proudly served customers for 84 years, and we have benefited a great deal from Koch’s robust guidance and infrastructure since its initial investment in 2012,” said Ron Vaupel, president and CEO of Guardian. “Our companies align in many areas including culture, global footprint and supply chain. We are excited to continue working together to create value for our customers and society.”

The transaction is subject to customary closing conditions including antitrust approval, and is expected to close in the first quarter of 2017. Additional terms of the deal were not disclosed.

“Working with Guardian’s dedicated employees has proven to be a rewarding experience,” said Dave Robertson, president and COO of Koch. “We look forward to combining the strengths and capabilities of Guardian and Koch to better meet the needs of our customers.”

“Guardian is a world-class organization and a leader in providing innovative products,” said Charles Koch, chairman and CEO of Koch. “This acquisition fits well with our culture and core capabilities. We look forward to Guardian fully joining the Koch Industries family.”

BDT & Company, LLC and Evercore Group, L.L.C. acted as financial advisors to Guardian Industries, and Munger, Tolles & Olson LLP acted as the company’s legal counsel. Goldman, Sachs & Co. and Citigroup acted as Koch’s financial advisors, and Jones Day acted as its legal counsel.

Guardian offered no additional comments as of press time.

Michael Collins,  managing director with Building Industry Advisors LLC in Chicago, says the deal is a very positive sign for the glass industry on a number of levels.

“First, while the Koch brothers may not be household names to the same extent as Warren Buffett, their moves are watched every bit as closely by the financial community,” he said. “A very wealthy family with the means to invest in literally any asset class or industry in the world has chosen to make a large follow-on bet in the North American glass industry. That represents a noteworthy prediction of continuing success for this segment. Also, Koch Industries is an organization with access to vast amounts of capital, making them a great candidate to fund future investments in plants and improvements that can address the current bottleneck in the glass industry. Finally, they’ve chosen to undertake this transaction on an all-cash basis. This means that Koch Industries views Guardian as a highly attractive investment for the cash generated by its other businesses. The company did not need to fund the acquisition with large amounts of cheaper debt in order to make its investment thesis work. A cynic might say they didn’t want to take on additional debt, due to the risk of construction or auto sales slowing, but the bet is overwhelmingly a positive sign for the glass industry.”

Guardian has been in the news recently after its float glass plant in Venezuela was seized by that country’s socialist government in late July. Koch Industries has also had facilities seized by Venezuela.

In 2010, Koch’s Venezuelan fertilizer operations were taken over by the government of then-president Hugo Chavez. The company petitioned the World Bank’s International Centre for Settlement of Investment Disputes for relief in July 2011. A decision in the case is still pending.

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