Owens Corning, Saint-Gobain discuss potential merger of reinforcements businesses

By Caroline Salls

Pittsburgh, July 27 - Owens Corning and Saint-Gobain are in discussions to merge Owens Corning's reinforcements business and Saint-Gobain's reinforcement and composites businesses, a part of the entity known as Vetrotex, into a new company to be called Owens Corning-Vetrotex Reinforcements, according to an Owens Corning news release.

According to the release, the partnership of these two businesses would establish a global company in reinforcements and composite fabrics products, with worldwide revenues of $1.8 billion and 10,000 employees.

The new company would have operations across Europe, North and South America and Asia, including in China, India, Russia, Mexico and Brazil.

Saint-Gobain's textile solutions business, serving mainly construction markets, will remain part of Saint-Gobain's high performance materials sector, while Owens Corning's Veil Technologies and Fabwel businesses will remain part of the Owens Corning composite solutions business.

"This is an exciting opportunity for Owens Corning, our customers and our employees," Owens Corning president and chief executive officer Dave Brown said in the release.

"It demonstrates our commitment to the composites business and our customers on every continent. We plan to combine the best of both companies, grow with our customers and deliver strong operating results."

While the parties have not yet reached a definitive agreement, Owens Corning said it expects the transaction to be structured as a joint venture, with Owens Corning owning a 60% equity interest and Saint-Gobain owning the remaining 40%.

After a minimum of four years, the joint venture provisions would give an option to Saint-Gobain to sell its stake to Owens Corning.

In addition, the release said the Owens Corning-Saint-Gobain joint venture would present significant opportunities for synergies, which are expected to come primarily from scale benefits in purchasing and procurement, operational and technological plant improvements, improved distribution costs, reduced administrative costs and asset management optimization.

The transaction is expected to close by early 2007 and is subject to the negotiation and execution of definitive transaction documents, board of directors approval by the parent companies and regulatory and antitrust approvals.

Owens Corning-Vetrotex Reinforcements would have headquarters in Toledo, Ohio. The board of directors for the new company would be comprised of three representatives from Owens Corning and two from Saint-Gobain.

The chief executive officer of Owens Corning-Vetrotex Reinforcements would be Chuck Dana, currently president of Owens Corning's composite solutions business, and an executive management team comprised of key leaders from Owens Corning and Vetrotex would manage the new organization.

Owens Corning, a Toledo, Ohio, building materials company, filed for bankruptcy on Oct. 5, 2000 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 00-3837.

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