Sector News

Westlake agrees to buy Axiall for $3.8 billion

June 13, 2016
Chemical Value Chain

Westlake Chemical has agreed to acquire Axiall for $33.00 share–65% more than Westlake originally offered–in an all-cash transaction that values Axiall at about $3.8 billion.

The companies say the transaction has been unanimously approved by the boards of directors of both companies, and it is expected to close by the fourth quarter.

The deal vindicates Axiall’s management, which had been holding out for a higher price for six months. Westlake made its first bid in January, offering $20.00 share, $11/share in cash and the remainder in Westlake stock, for a total of about $2.9 billion; and a second in April, offering $23.50/share, with $14/share in cash, for a total of about $3.1 billion. Axiall rejected both offers as “opportunistic and inadequate.”

Westlake turned up the pressure in May, nominating a proxy slate to replace Axiall’s board of directors at its annual meeting this month. Axiall responded by inviting Westlake to revise its bid by 3 June, and Westlake accepted. No sooner had that deadline passed, however, than Lotte Chemical (Seoul) made a surprise entrance, announcing on 7 June that it had submitted a bid of its own.

Today’s announcement settles the matter. The deal will create the third-largest chlor-alkali producer and the second-largest PVC producer in North America, with expected combined pro forma revenues of $7.6 billion and Ebitda of $1.5 billion for the 12 months ended in the first quarter of 2016. Westlake says it expects the transaction to be accretive to earnings in the first year after close, and to deliver annualized cost synergies of about $100 million.

Analyst Hassan Ahmed of Alembic Global Advisors (New York) praised the deal. “We see this deal being positive for Westlake shares,” he said in a note issued this morning. “We estimate operational synergies of around $340 million–far higher than management’s announced $100 million. The $340 million synergy figure would imply that the Axiall acquisition would be 29% accretive off the bat.”

“This transaction aligns two remarkable companies, creates a company with greater financial and operational flexibility and accelerates our growth strategy,” says Albert Chao, Westlake’s president and CEO. “We believe that after this transaction we will be better able to serve our customers with a more diversified portfolio that should create significant value and growth opportunities for Westlake stockholders.”

Lotte will remain in the picture. Westlake noted in the deal’s announcement that it “looks forward to working with Lotte Chemical on its current joint venture with Axiall,” an ethane cracker under construction in Lake Charles, LA.

By Clay Boswell

Source: Chemical Week

comments closed

Related News

October 1, 2023

INEOS announces the acquisition of the Eastman Texas City Site for ~$500 million

Chemical Value Chain

The deal includes the 600kt Acetic Acid plant and all associated third party activities on the site. Eastman and INEOS have also entered into a Memorandum of Understanding to explore options for a long-term supply agreement for vinyl acetate monomer.

October 1, 2023

Executive Vice President Lucrèce Foufopoulos-De Ridder to leave Borealis

Chemical Value Chain

The Supervisory Board of Borealis has accepted the decision of Lucrèce Foufopoulos-De Ridder, EVP Polyolefins, Circular Economy Solutions and Innovation & Technology to step down from her executive position at Borealis, and the Board of Borouge Pte effective 31 December 2023 to pursue other career opportunities.

October 1, 2023

Sidel unveils new StarLiteR rPET solution

Chemical Value Chain

Sidel has launched a new 100% rPET bottle base, StarLiteR, aiming to help carbonated soft drink (CSD) packaging producers embrace material circularity. StarLiteR allows CDS producers to switch to rPET bottle production easily and efficiently, while significantly reducing the impact on product quality or packaging integrity.

How can we help you?

We're easy to reach