Axalta Coating Systems Ltd announced that its board of directors has initiated a comprehensive review of strategic alternatives to maximise shareholder value. The Board has formed a Strategic Review Committee, which will be chaired by the Independent Presiding Director of Axalta’s Board, Mark Garrett, and will also include Axalta Chief Executive Officer Robert Bryant and Axalta Independent Director Samuel Smolik.
“Axalta’s Board is committed to maximising value for all shareholders and has initiated a comprehensive review of strategic alternatives, including a potential sale of the Company, changes in capital allocation, and ongoing execution of our strategic plan,” said Mr. Garrett. “Axalta’s management team and Board have a strong track record of pursuing M&A opportunities, along with other initiatives and alternatives, to maximise shareholder value.”
“Axalta continues to execute on its long-term strategy, delivering significant cost savings to bolster our industry-leading margins, re-deploying free cash flow to drive accretive organic and inorganic growth initiatives, and returning more than $380 million to shareholders over the last two years,” added Bryant. “Given Axalta’s progress in recent years and its leading position as a global coatings company – with 90% of 2018 sales derived from end markets where we have either the No. 1 or No.2 global position – we believe that now is the right time to review a full range of options in an effort to maximise value for all shareholders.”
The possible sale would be the second for the former DuPont Performance Coatings business this decade. The Carlyle Group private equity firm acquired DuPont Performance Coatings, for $4.9 billion in deal announced in 2012 that was completed in February 2013 and renamed Axalta. The company was taken public in November 2014 and Carlyle periodically reduced its stake, ultimately selling the remainder of its position in 2016.
Consolidation in the coatings business has been a frequent topic over the past few years. In 2017, Axalta and AkzoNobel explored a potential merger of the two global coatings companies. Those talks concluded without a deal. The discussion on the merger followed AkzoNobel’s rebuffing of an unsolicited merger offer from PPG Industries earlier in 2017. PPG ultimately declined to make a hostile takeover for AkzoNobel.
In May this year, PPG announced that two separate and independent reviews of its business portfolio were completed, with each firm independently conducting multi-faceted evaluations of PPG’s business portfolio, including potential separation opportunities. Based on the reports and its own evaluation PPG’s Board determined that maintaining the company’s current business portfolio composition, including its architectural and industrial coatings businesses, provides the best opportunity to maximise long-term shareholder value.
In 2017, Sherwin-Williams completed its acquisition of Valspar. Sherwin announced it was acquiring Valspar in March 2016 in a deal valued at $11.3 billion.
Axalta’s board has engaged Evercore and Barclays as financial advisors and Morrison & Foerster LLP as legal advisor to assist in its review.