Axalta today said it is launching a review of strategic alternatives, including a potential sale of the company. Axalta shares jumped 13.6% after the news on 19 June, closing at $29.33.
The company has formed a strategic review committee chaired by independent presiding director Mark Garrett. The committee also includes Axalta CEO Robert Bryant and independent director Samuel Smolik.
“Axalta continues to execute on its long-term strategy, delivering significant cost savings to bolster our industry-leading margins, redeploying free cash flow to drive accretive organic and inorganic growth initiatives, and returning more than $380 million to shareholders over the last two years,” Bryant says.
Axalta’s largest shareholder is Berkshire Hathaway, with a 10.3% stake. Barclays and Evercore are acting as financial advisors to Axalta on the review, and Morrison & Foerster is acting as legal advisor.
The company is facing headwinds from soft automotive production, although pressure on margins seems likely to abate given a recent pullback in energy prices, says Laurence Alexander, an analyst with Jefferies (New York). “Axalta has discussed a sale of the company in the past, and our model pegs the company value at $38/share,” Alexander adds. “Over the past three years, bolt-on M&A and share repurchases have been the first use of cash.”
The timing and outcome are uncertain, and Axalta says it will not comment on the review until it is complete.
By Vincent Valk
Source: Chemical Week
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