PPG Industries, Inc. PPG
PPG has underperformed peers by 3,500 bps under CEO McGarry; Trian wants Chuck Bunch reinstalled, the balance sheet levered, and the portfolio split into Architectural and Industrial to unlock ~40% upside.
Thesis
PPG is the global #2 paints and coatings company trading at a ~5x NTM P/E discount to Sherwin-Williams and roughly 40% below sum-of-parts intrinsic value after chronically underperforming peers since Michael McGarry took over in September 2015. Trian documents a litany of execution failures: 3,500 bps of TSR underperformance, three consecutive annual profit warnings, accounting irregularities requiring six quarters of restatements, the loss of the Lowe's Olympic account to Sherwin-Williams, and a botched hostile bid for Akzo Nobel. The prescription: immediately reinstate former CEO Chuck Bunch — who delivered ~10% EPS CAGR and 234% TSR — lever the balance sheet from 1.7x to peer ~4x, separate into Global Architectural and Industrial Coatings companies, declassify the staggered board, and tie CEO pay to performance, together unlocking 15-40% of incremental shareholder value.
SCQA
PPG is the global #2 paints and coatings company with ~$14.8bn in sales, spanning architectural paints, automotive OEM, refinish, aerospace, packaging, and industrial coatings across consumer and industrial end markets.
Under CEO Michael McGarry, PPG has trailed peers by 3,500 bps of TSR, issued three consecutive profit warnings, restated six quarters of earnings, lost the Lowe's account, and botched a hostile bid for Akzo Nobel.
Reinstate former CEO Chuck Bunch, lever up from 1.7x to ~4x EBITDA to match peers, separate into Architectural and Industrial Coatings companies, declassify the staggered board, and align CEO compensation with actual performance.
Sum-of-parts implies ~40% upside to the $98.50 share price; separation alone could unlock 15-40% incremental value, with Architectural valued at 12-15x and Industrial at 12-14x 2019e EBITDA.
The three reasons
- 1
PPG trades at a ~5x P/E discount to Sherwin-Williams and ~40% below sum-of-parts intrinsic value
- 2
Three straight profit warnings, accounting restatements, and lost Lowe's account reveal management breakdown
- 3
Separating Architectural from Industrial Coatings could unlock 15-40% of incremental shareholder value
Primary demands
- Immediately bring back Chuck Bunch as Chairman/CEO, replacing Michael McGarry
- Improve capital structure efficiency — lever up from 1.7x to ~4x EBITDA like closest peers
- Commence a strategic portfolio review and consider separating into a Global Architectural Coatings company and a Global Industrial Coatings company
- Enhance ESG profile: declassify the staggered board, eliminate 80% supermajority removal threshold, allow shareholders to call special meetings, and align CEO compensation with performance
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Precedents cited
- DuPont/Chemours (Trian-led management change and separation)
- Ingersoll Rand / Allegion separation
- Kraft / Mondelez separation
- Cadbury / Dr Pepper Snapple separation
- Wendy's / Tim Hortons separation
- Sherwin-Williams / Valspar (16.9x EBITDA precedent transaction)
- PPG Board's own ~15x EBITDA valuation of Akzo Nobel coatings
Notable slides (5)
Notes
Classic Trian operational-activist playbook: management change + capital structure + spinoff + governance reform, argued through precedents (DuPont case study pp.35-36, portfolio-company margin-expansion data p.40). CEO-quote contradiction on p.9 juxtaposes McGarry's '10% EPS growth preference' with flat EPS chart. Torn-paper quote motif used three times (pp.9, 12, 17). Stake percent not disclosed in this document; Trian's 13D reported a ~2.9% position around this timeframe but figure is not in the deck. No single closing-ask slide — the four-pronged recommendation stands as the ask from p.3 and p.16.