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PPG Joins Trend in Expanding Share Repurchase

Friday, October 22, 2010

PPG Industries has added 10 million shares to its existing stock buyback program, fueling the growing repurchasing boon among coatings and chemical companies.

PPG announced Friday (Oct. 22) that its board of directors had authorized the repurchase of an additional 10 million shares of stock. The announcement was the second of its kind for PPG in 10 months. In December 2009, the company authorized a repurchase program for 5 million shares, of which about 3.1 million shares are still available.

As of Sept. 30, PPG had about 165 million shares outstanding. The company’s stock has risen 31% so far this year, according to Dow Jones.

Friday’s announcement came a day after PPG reported a 65% increase in its third-quarter profit. The company has reported dramatically stronger results in recent quarters as the global economy recovers.

The new authorization is effective immediately, does not expire, and gives management discretion in determining the conditions under which shares may be purchased from time to time.

Repurchases will be made in accordance with applicable securities laws in the open market or in privately negotiated transactions. Depending on market conditions and other factors, these repurchases may commence or cease from time to time without prior notice.

Spreading Trend

PPG has plenty of company in its repurchasing push. Several companies have recently launched or increased their buyback efforts as the need to hoard cash has waned with the improving economy, and some companies see the opportunity to buy back shares at bargain prices, Dow Jones reports.

On Oct. 13, the Valspar Corp.’s Board of Directors authorized the repurchase of up to 15 million shares of outstanding common stock—about 15% of that company’s current outstanding shares.

The new authorization replaced one approved in October 2009, which allowed for the repurchase of up to 4 million shares. Valspar has at least 1.5 million fewer shares outstanding compared with a year ago. As of Oct. 12, the company had 97,969,277 common shares outstanding.

H.B. Fuller

On Sept. 30, H.B. Fuller Co. announced a repurchase program of up to $100 million of the company's outstanding common shares.

Fuller is a global provider of adhesives, sealants, paints and other specialty chemical products.

Jim Giertz, senior vice president and chief financial officer, said the repurchase program would allow the company “to return excess capital to our shareholders while fully maintaining our financial flexibility to invest in our business. We intend to use the program primarily to buy back shares that we issue under our stock-based incentive compensation plans."

Tikkurila, AkzoNobel, Sherwin-Williams

In March, the specialty chemicals firm Kemira Oyi announced a repurchase program for up to 4,156,957 shares. Kemira had just spun off Tikkurila Oyj, the decorative paint giant in Eastern Europe and the Nordic region. In May, Tikkurila announced its own stock repurchase.

In 2008, AkzoNobel bought back 31,746,972 shares totaling €1,437 million (about $2 billion US), then 12.1% of its share capital. The total number of outstanding shares on Dec. 31, 2008, after the repurchase, was 231,664,187.

In 2007, The Sherwin-Williams Co. announced a program to repurchase 30 million—about 23%—of its 130 million shares then outstanding. By the end of the company’s second quarter this year, it still had an unutilized authorization to buy 8.4 million shares.