Axiall Corp rejects $1.4-bn unsolicited takeover offer from Westlake Chemical
30 January 2016
US chemical and building products maker Axiall Corp yesterday said that it had rejected a $1.4-billion cash-and-stock unsolicited takeover proposal from Westlake Chemical Corp.
''We believe that Westlake's proposal is an opportunistic attempt to take advantage of challenging public equity market conditions and significantly undervalues Axiall's assets and its long-term prospects,'' said Timothy Mann, president and CEO of Axiall.
''The price of Axiall stock was at $20.18 as recently as December 1, 2015. We remain committed to achieving our $100 million run rate cost reduction and productivity target by the end of 2016, as well as our investment in the LACC ethane cracker project with our joint venture partner Lotte Chemical,'' he added.
Westlake Chemical has offered to pay $20 per share, comprising of $11 in cash and 0.1967 of Westlake share, representing a value of $9 based on Westlake's closing price on 22 January 2016, the last trading day before Westlake made its proposal.
The offer represents a premium of 108 per cent to Axiall's closing price of $9.60 on 22 January 2016.
The total value of the proposed transaction is approximately $2.9 billion, including $1.5 billion debt.
Westlake, based in Houston said that the merger would create a more efficient, diversified and competitive company, far better positioned to succeed and grow in this challenging environment.
''With Westlake's Olefins business and a combined Westlake/Axiall Vinyls business, there would be an immediate opportunity to backward integrate into the ethylene market. The combined company would also benefit from Westlake's European vinyls business (Vinnolit), which is a global leader in vinyl technology and specialty PVC resins,'' it said in a statement.
Westlake is a manufacturer and supplier of petrochemicals, polymers and building products with a range of products that includes: ethylene, polyethylene, styrene, propylene, caustic, VCM, PVC suspension and specialty resins and PVC building products including pipe and specialty components, windows, fence, deck and film.
Commenting on the rejection, Albert Chao, Westlake's president and CEO, said, "We are surprised and disappointed by Axiall's summary rejection of our proposal, which provides Axiall shareholders with a significant premium and upside potential via their participation in the increased scale and synergies of the combined company.''
''The combined company would be more diversified and have a stronger financial profile than Axiall, providing it with significant financial and operational flexibility, a greater ability to serve its customers, and improved ability to capitalize on future investment opportunities,'' he added.
It has a market cap of $6 billion and annual revenues of $4.42 billion.
Westlake has retained Deutsche Bank Securities and Goldman Sachs as its financial advisers, Cleary Gottlieb Steen & Hamilton as its legal counsel, MacKenzie Partners and other advisers.