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Axiall board rejects Westlake's $2.9-billion bid

February 1, 2016
Chemical Value Chain

Westlake Chemical (Houston) says its $2.9-billion bid to acquire Axiall (Atlanta) has been “summarily rejected” by the Axiall board of directors.

The combination would create North America’s second-largest producer of polyvinyl chloride (PVC), with 23% of the market’s 8.9 million m.t./year of production capacity.

“Axiall has rejected the proposal and refused to engage with us to discuss its merits,” says Albert Chao, Westlake’s president and CEO. “Instead, Axiall said it prefers to pursue a standalone strategic plan, but the market reaction to this plan does not suggest it will deliver anywhere near the value and upside of our proposal.”

Westlake offered $20 for each share of Axiall—$11 in cash and $9 in Westlake stock, for a 108% premium over Axiall’s closing price of $9.60/share on 22 January, the last trading day before the initial proposal. The deal included the assumption of liabilities, including $1.5 million of outstanding debt.

“In this challenging environment, we believe Axiall’s unwillingness to even discuss our compelling proposal exposes its shareholders to significant risk and uncertainty,” Chao says. “We urge the Axiall board to act in the best interests of its shareholders by meeting with us to begin negotiating a transaction without delay.”

Hassan Ahmed, analyst at Alembic Global Research, has issued a note arguing that Westlake’s initial offer significantly undervalues Axiall.

North America’s other producers of PVC include Shintech, the largest producer, followed by OxyChem, Formosa Plastics, and Mexichem.

The trading of Axiall closed Thursday at $9.79/share, down 1 ct for the day.

By Clay Boswell

Source: Chemical Week

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