Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

MarketScreener Homepage  >  Equities  >  Nyse  >  Axalta Coating Systems Ltd    AXTA   BMG0750C1082

My previous session
Most popular
News SummaryMost relevantAll newsOfficial PublicationsSector newsTweets

Axalta Coating : Akzo Considers Plan for Merger, Chemicals Deal -- WSJ

share with twitter share with LinkedIn share with facebook
share via e-mail
10/30/2017 | 07:48am CEST
By Ben Dummett 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 30, 2017).

Akzo Nobel NV and U.S. rival Axalta Coating Systems Ltd. are considering a possible merger of equals that would create a multibillion-dollar coating and paints giant, according to a person familiar with the matter.

The possible deal under consideration would involve the Dutch paint company first proceeding with its existing plans to spin off its specialty chemicals business and distribute proceeds to shareholders, the person said.

While preliminary talks about a possible deal have previously been reported, it wasn't clear that they centered on structuring the deal as a merger of equals.

The combined company would have added scale to generate better pricing for raw materials, eliminate overlapping operations and gain new customers to help revive profit growth. Coatings are used to prevent corrosion and improve durability across a range of sectors such as the automotive, electronics, mining and marine industries.

The talks are at an early stage and could collapse before a deal is reached, according to the person familiar with the matter.

A merger of equals typically involves companies with a similar market value. The deals are structured through a share swap and shareholders of neither company receive any significant premium for their stock. This type of structure would be crucial in an attempt by Akzo to win support from its shareholders, some of whom have been concerned that the Amsterdam-based company could seek a major acquisition, potentially paying a significant premium, to protect itself against an unwanted suitor.

Earlier this year, Elliott Management Corp., the well-known activist investor and one of Akzo's biggest shareholders, mounted a bold public-relations and legal campaign to force Akzo into unwanted sale talks with its U.S. paints rival PPG Industries Inc. The $28 billion takeover attempt ultimately failed. In August, Elliott and Akzo reached a truce over the Dutch company's alternative plan to separate its specialty-chemicals business and distribute the proceeds to shareholders to generate value for investors.

Currently, Akzo has market value of about $22.6 billion, compared with Axalta's value of about $8.1 billion. That gulf in valuation precludes a merger of equals and would instead require Akzo paying a takeover premium to acquire Axalta. By selling or spinning off the specialty chemicals business first as a condition to a deal with Axalta, Akzo's market value would likely fall more closely in line with its Philadelphia-based rival. Some analysts estimate the specialty chemicals business could be valued at as much as $10 billion, which would no longer be reflected in Akzo's market capitalization after the spinoff.

Akzo has stressed that its plan to spin off the chemicals business and distribute the proceeds to shareholders remains on track.

Even with the spinoff of the specialty chemicals business, Akzo could face difficulty getting its shareholders to support an Axalta deal because the merger would make it more expensive than it otherwise would be for a potential suitor.

On Friday, Swiss chemicals company Clariant AG and U.S.-based Huntsman Corp. ended their proposed $15 billion merger after Clariant's largest shareholder, activist investor White Tale Holdings, opposed the deal. That led some analysts to speculate that Clariant is now a prime takeover target in the consolidating chemicals sector.

That said, talks of a possible merger between Akzo and Axalta might appeal to shareholders as the companies seek ways to boost slumping profits, allowing a combined company to cut costs and potentially broaden its customer base.

For the third quarter, Akzo reported a 13% drop in adjusted operating profit, hurt in part by higher raw-material costs and sluggish demand from the marine industry. Axalta's adjusted net income fell 20% over the same period amid lower volumes in North America and higher raw-material costs.

Write to Ben Dummett at ben.dummett@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
AKZONOBEL -2.32% 71.68 Delayed Quote.0.49%
AXALTA COATING SYSTEMS LTD -1.73% 24.765 Delayed Quote.-22.13%
share with twitter share with LinkedIn share with facebook
share via e-mail
10/18AXALTA COATING SYSTEMS LTD. : Regulation FD Disclosure (form 8-K)
10/18AXALTA COATING : Announces Commencement Of Consent Solicitations
10/17AXALTA : Introduces Wood Vibes Collection for the Wood Finishing Industry
10/17AXALTA : Hosts Automotive Career Fair at its Customer Experience Center
10/12AXALTA COATING SYSTEMS LTD. : Results of Operations and Financial Condition (for..
10/10AXALTA COATING : Schedules Third Quarter 2018 Results Conference Call
10/10AXALTA COATING : Launches racing.com
10/10Pomerantz Law Firm Investigates Claims On Behalf of Investors of Axalta Coati..
10/09Bronstein, Gewirtz & Grossman, LLC Announces Investigation of Axalta Coating ..
10/09Former Akzo Nobel chemicals back to market in 3-5 years - CEO
More news
News from SeekingAlpha
10/09PPG -10% after warning on higher costs, softer demand 
10/08PPG Industries -9% after issuing downside Q3 earnings, revenue guidance 
10/08Axalta CEO Hahn resigns following probe; Bryant becomes interim CEO 
09/06Tracking Wallace Weitz's Weitz Investment Management Portfolio - Q2 2018 Upda.. 
09/04Terrence Hahn officially joins Axalta as CEO 
Financials ($)
Sales 2018 4 738 M
EBIT 2018 574 M
Net income 2018 304 M
Debt 2018 2 935 M
Yield 2018 -
P/E ratio 2018 20,30
P/E ratio 2019 17,36
EV / Sales 2018 1,90x
EV / Sales 2019 1,76x
Capitalization 6 063 M
Duration : Period :
Axalta Coating Systems Ltd Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends AXALTA COATING SYSTEMS LTD
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 17
Average target price 32,9 $
Spread / Average Target 31%
EPS Revisions
Robert W. Bryant Executive VP, Chief Executive & Financial Officer
Charles W. Shaver Chairman
Barry S. Snyder Chief Technology Officer & Senior Vice President
Aaron Weis Chief Information Officer & Senior Vice President
Robert M. McLaughlin Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
PPG INDUSTRIES-13.21%23 957
AKZONOBEL0.49%21 489
ASIAN PAINTS6.72%16 452