Volume 34, Number 1, January 1999

 

ISSUE AT HAND

The Guardian-Safelite "Deal"

by Debra Levy

The auto glass segment of our industry is one of the few where facts usually bear out rumors. Most people think that because it is such a small industry that so much information runs the grapevine before it hits conventional news outlets.

Normally when we hear rumors such as the ones that burned up the phones in the auto glass business during these last two weeks, we jump on them. But when I first got calls from a number of readers saying they’d heard that "Guardian bought Safelite," a few things didn’t make sense.

First, Safelite had just successfully renegotiated bank terms and continues to navigate its way through a number of challenges, including cash management (a challenge with which every business owner, no matter what size, can relate) and the challenges of successfully integrating into one big happy family two distinctly different corporate cultures that had competed against each other as fierce enemies for years.

Second, just last month, I had spent a few hours speaking with Russ Ebeid, president of Guardian Industries Glass Group at his offices in Auburn Hills, MI. You’ll see the results of that discussion in an interview with Mr. Ebeid in our March issue. He is an insightful man and was, I think, quite candid with his remarks. We talked a bit about retail locations and whether or not Guardian would be expanding in that area. Ebeid said no. "The further down the chain you go, the less money to be made," he said. "Why would we want to concentrate on that end?" But, I protested, Guardian already owns retail locations. "Yes," he said, "but we use those to keep a pulse on the market." When asked on January 7 about the rumor, Ebeid said there was "no truth to it."

So it was with this in mind that we set out to find the real story. Here it is:

Safelite is owned by Belron, a South African company with auto glass holdings all over the world. These holdings include Carglass in Germany and Autoglass in the U.K. They, along with Safelite, all use the same familiar red and yellow logo. Belron, in turn, is owned by a parent company PGSI, which is a public company listed on the Johannesburg Stock Exchange. Its major shareholder, South African Breweries (SAB) owns a 68 percent interest in PGSI. On November 9, PGSI issued a cautionary statement saying that SAB has been approached concerning the possible sale of its 68 percent interest in PGSI.

"We’ve been fighting this rumor quite a bit," said Safelite president John Barlow. Barlow said that Belron has issued a statement saying that "since the [cautionary] statement, discussions (which are not with any American glass company as rumored) have continued to take place." I asked Barlow if that statement could include the foreign subsidiaries or adjunct to U.S. companies and he said that "it’s very clear it’s not a U.S. company."

So it may be that the majority stockholder in PGSI is about to change and that will affect industry. The story continues to unfold.

You can plan to ask Mr. Barlow about a range of issues next month. He will be part of a panel discussion held during Glass Expo Hawaii ’99. The event is sponsored by USGlass magazine. He, along with Mark Freidman of Nationwide Insurance, Bill Hardt of State Farm and Vivek Vasudeva of NAGS are expected to provide a look at our industry into the next century. It is one of a variety of interesting panels and sessions to occur at the expo. -Deb

 


USG

Copyright 1999 Key Communications, Inc. All rights reserved. No reproduction of any type without expressed written permission.