The deal is part of Pilkington's strategy of selling peripheral businesses to cut its borrowings. Andrew Robb, finance director, said the disposal would cut eight points from its gearing. The target is to reduce borrowing to half its net assets by next March.
The group is due to announce its results for the year to March on Thursday and Mr Robb would not reveal the group's debt before that. Analysts estimate that it is about pounds 830m, or 66 per cent of shareholders' funds, so the sale will cut gearing to about 58 per cent.
Pilkington's insulation business made pounds 3m profit before tax on sales of pounds 84m in the year to March 1993, and has net assets of about pounds 50m. It has about 900 employees, half of them in St Helens, Pilkington's home town, and the remainder at two sites in Wales.
Although Owens-Corning is one of the world's leading insulation manufacturers, its European business is small, based on a factory in Belgium. It will also take on pounds 7m of finance leases. The sale will produce a profit of about pounds 23m for Pilkington, to be taken in the current year's results.