Enterprising Investor
7 years ago
Axalta and AkzoNobel End Merger of Equals Discussions (11/21/17)
PHILADELPHIA--(BUSINESS WIRE)--Axalta Coating Systems (NYSE: AXTA), a leading global coatings company, today confirmed that its previously announced talks with AkzoNobel have ended regarding a potential merger of equals transaction between Axalta and Akzo’s Paints and Coatings business, as the companies were unable to reach mutually agreeable terms. Axalta continues to pursue other value-creating alternatives.
“After pursuing a potential combination of Axalta and Akzo, we concluded we could not negotiate a transaction on terms that meet our criteria,” said Charles W. Shaver, Axalta’s Chairman and Chief Executive Officer. “Any transaction we ultimately agree to needs to generate superior long-term value for Axalta shareholders as compared to the continued execution of our strategic plan.”
About Axalta
Axalta is a global leader in the coatings industry, providing customers with innovative, colorful, beautiful and sustainable coatings solutions. From light vehicles, commercial vehicles and refinish applications to electric motors, building facades and other industrial applications, our coatings are designed to prevent corrosion, increase productivity and enhance durability. With more than 150 years of experience in the coatings industry, the 13,300 people of Axalta continue to find ways to serve our more than 100,000 customers in 130 countries better every day with the finest coatings, application systems and technology. For more information, visit axaltacoatingsystems.com and follow us @Axalta on Twitter.
http://www.businesswire.com/news/home/20171121006074/en/Axalta-AkzoNobel-Merger-Equals-Discussions
Enterprising Investor
8 years ago
Axalta Coating Systems to Acquire Valspar's North American Industrial Wood Coatings Business (4/12/17)
PHILADELPHIA--(BUSINESS WIRE)--Axalta Coating Systems (NYSE:AXTA), a leading global supplier of liquid and powder coatings, announced today that it has entered into a definitive agreement with The Valspar Corporation (NYSE:VAL) and The Sherwin-Williams Company (NYSE:SHW) to acquire the assets related to Valspar’s North American Industrial Wood Coatings business for $420 million in cash. Valspar is divesting the business in connection with the reviews by the Federal Trade Commission (FTC) and Canadian Competition Bureau (CCB) of the proposed acquisition of Valspar by Sherwin-Williams. The business had revenues of approximately $225 million in 2016 and is one of the leading providers of coatings for OEM and aftermarket Industrial Wood markets, including building products, cabinets, flooring and furniture in North America.
Known in the market today as Valspar Wood, the business has a number of widely known and respected brands including Zenith®, Lustre Lac™ and Graintone™, among others. These products are backed by a strong R&D and technology organization and best-in-class customer service.
“This is an outstanding opportunity for Axalta to enter the large Industrial Wood Coatings market with an industry-leading portfolio of products and customers,” said Axalta Chairman and CEO, Charlie Shaver. “The strong reputation enjoyed by these brands among a long-term customer base will provide an excellent platform for future growth in this important market. Our shared commitment to technology and excellence in application services, as well as a strong pipeline of new products, will enable us to meet the needs of both current and new customers. This acquisition continues to build on our strategy to strengthen and further diversify our Performance Coatings segment.”
Axalta intends to operate this business as a pure bolt-on. As part of the transaction, Axalta will acquire the personnel, both dedicated manufacturing sites, R&D assets and the underlying intellectual property of Valspar’s North American Industrial Wood Coatings business. The transaction is subject to the closing of the Valspar and Sherwin-Williams merger, as well as customary closing conditions and regulatory approvals, including the approval of the FTC and the CCB. Axalta has secured a financing commitment for the transaction through Deutsche Bank AG New York Branch, subject to customary closing conditions. Centerview Partners LLC acted as financial advisor to Axalta.
About Axalta Coating Systems
Axalta is a leading global company focused solely on coatings and providing customers with innovative, colorful, beautiful and sustainable solutions. From light OEM vehicles, commercial vehicles and refinish applications to electric motors, buildings and pipelines, our coatings are designed to prevent corrosion, increase productivity and enable the materials we coat to last longer. With more than 150 years of experience in the coatings industry, the approximately 13,000 people of Axalta continue to find ways to serve our more than 100,000 customers in 130 countries every day with the finest coatings, application systems and technology. For more information visit axaltacoatingsystems.com and follow us @axalta on Twitter and on LinkedIn.
http://www.businesswire.com/news/home/20170412005402/en/Axalta-Coating-Systems-Acquire-Valspars-North-American
Enterprising Investor
8 years ago
Axalta Coating Systems Acquires United Paint’s Automotive Interior Rigid Thermoplastics Coatings Business (7/20/16)
PHILADELPHIA--(BUSINESS WIRE)--Axalta Coating Systems (NYSE: AXTA), a leading global supplier of liquid and powder coatings, has announced the acquisition of the automotive interior rigid thermoplastics coatings business of Michigan-based United Paint and Chemical Corporation. Production will temporarily remain at United Paint’s Southfield, Michigan facilities and will transfer to Axalta’s facilities in a phased manner. Financial terms of the transaction were not disclosed.
United Paint’s interior rigid thermoplastics coating technology is a great fit for Axalta as we fulfill our commitment to provide our customers in the global vehicle manufacturing industry with a complete range of coating systems,” said Steven R. Markevich, Axalta Executive Vice President and President of Transportation Coatings and Greater China. “Vehicle interiors are a logical extension of the expertise we have developed to serve the growing automotive plastic components market as traditional materials are replaced by lightweight alternatives. Vehicle manufacturers will benefit by being able now to rely on Axalta as a single source supplier of coatings for vehicle interiors as well as exterior surfaces.”
“We believe Axalta is an excellent long-term home for our automotive interior rigid thermoplastics coatings business,” said J. Geoff Piceu CEO of United Paint. “With its leadership position in the automotive exterior coatings market, its history of innovation, focus on customers and its global scale and reach, we are confident Axalta will allow the individuals, products and customers associated with this segment of our business to maximize their global potential.”
Founded in 1953, United Paint is a formulator and manufacturer of highly innovative coatings for automotive interior applications with approvals of its products by 25 of the world’s leading vehicle manufacturers. Its coating systems enhance the durability and aesthetic qualities of components, such as instrument panels, consoles and appliques, inside many of the world’s most successful automotive programs. The divestiture of this segment of United’s business will allow it to continue a 63-year legacy of reinvestment in niche coating technologies. For more information visit unitedpaint.com.
About Axalta Coating Systems – Celebrating 150 Years in the Coatings Industry
Axalta is a leading global company focused solely on coatings and providing customers with innovative, colorful, beautiful and sustainable solutions. From light OEM vehicles, commercial vehicles and refinish applications to electric motors, buildings and pipelines, our coatings are designed to prevent corrosion, increase productivity and enable the materials we coat to last longer. With 150 years of experience in the coatings industry, the approximately 12,800 people of Axalta continue to find ways to serve our more than 100,000 customers in 130 countries better every day with the finest coatings, application systems and technology. For more information visit axaltacoatingsystems.com and follow us @axalta on Twitter and on LinkedIn.
http://www.businesswire.com/news/home/20160720006491/en/Axalta-Coating-Systems-Acquires-United-Paint%E2%80%99s-Automotive
Enterprising Investor
9 years ago
Painting a Pretty Picture at Axalta (5/14/16)
Shares of the company, a leading manufacturer of auto paints, could rise by at least 25% over the next year.
By David Englander
While It is a relatively new public company, Axalta Coating Systems is no newcomer to car makers and body shops around the world. A producer of paints and coatings for cars and trucks, Axalta holds the No. 1 or 2 positions in most its global markets.
Axalta (ticker: AXTA) is the leader in automotive refinishing, a highly attractive business, which is less cyclical than selling coatings for newly built vehicles. Sales, here, depend on collisions and miles driven, not production rates.
Once a part of DuPont, where it was largely run to generate cash, Axalta was bought by the Carlyle Group three years ago, and was brought public in November 2014. Since then, the game plan, under CEO Charles Shaver, has been to reinvest for growth, and to improve efficiency and productivity.
The strategy has paid off. Out of the gate, the shares have surged 40%, to a recent $28. Yet there’s still plenty of opportunity for investors. By the end of 2017, RBC Capital Markets analyst Arun Viswanathan contends, Ebitda (earnings before interest, taxes, depreciation, and amortization) could run up 19%, as efficiency improvements shine through. Paying down debt, too, should help.
Axalta generates hefty free cash flow. Barriers to entry, particularly in the refinishing business, are steep. Analyst Viswanathan values the stock at a 10 times multiple of enterprise value to Ebitda, or $35 a share, about 25% above its recent level. His best upside case puts the stock at $37 in a year.
Axalta operates 38 plants, and sells to customers both directly and through over 4,000 distributors. Its brands are well-recognized in the auto industry, and include the likes of Standox, Cromax, and Spies Hecker. The Carlyle Group is still Axalta’s top shareholder, with a 29% stake. In time, it will exit, which should expand the shareholder base.
THE REFINISHING MARKET REPRESENTS the largest slice of revenue, at 43%. It’s a high-margin business, accounting for more than 50% of company profits. Axalta supplies paints and color-matching technology to body shops and has 25% of the global market. Another 40% of its sales come from supplying coatings for new cars, SUVs, heavy trucks, trains, and buses. The remaining profits come from selling coatings for various industrial uses, construction, car components, and electrical insulation.
This year, analysts look for earnings of $294 million, or $1.20 a share, on $4 billion in revenue. In 2017, profit is expected to jump 22%, to $1.47 a share, on 3% higher sales. Free cash flow per share could top $2 a share.
U.S. light-vehicle sales have kept up their furious pace, logging a 3.3% increase in April, to an annualized 17.3 million units. Still, some investors worry about the impact on Axalta whenever sales do decline. Those fears are probably overblown. New cars account for only about 11% of the company’s sales in the U.S., and a similar amount in Europe, where sales are expected to remain strong.
More importantly, Axalta’s refinishing business probably would still grow, even if new-car sales slumped. Market consolidation, especially in the U.S., is one driver. Axalta has a dominant share of larger body shops’ business, and should benefit as these players buy mom-and-pop operations.
Cheaper gas, too, is a positive, as it tends to lead to more collisions, a good thing for refinishing work. In the March quarter, refinishing sales rose 5.3%, before currency effects. On the April earnings call, CEO Shaver guided for 4% to 6% annual revenue growth, company-wide, in 2016, before currencies.
Axalta plans to take out $200 million in annual costs over three years, ending in 2017. Net debt is $3 billion, or 3.3 times expected Ebitda. That could fall to about 2.5 times in the next 18 months or so.
Axalta has attracted some notable value investors. Meryl Witmer of Eagle Capital Partners recommended the stock in Barron’s Roundtable in January, when it traded around $25. Berkshire Hathaway, a 9.8% holder, first bought its shares in April 2015 from the Carlyle Group in a private placement for $28.
With the stock still around the same level, investors can buy in at Warren Buffett’s price.
[...]
http://www.barrons.com/articles/painting-a-pretty-picture-at-axalta-1463197491
Pre-publication closing price: $28.02
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