Westlake Chemical Corp. will buy Axiall Corp. for $33 a share after offering them more than a 40 percent increase than the original offer. Westlake tried to purchase Axiall in 2012, but their offers were rejected. The deal requires the acquisition of debt, which closes at $3.8 billion in cash.
Albert Chao, Westlake President and CEO, had a desire for the competitor so strong that he arranged to have a new team of Axiall board members for an adversarial takeover bid. Instead, the acquisition was announced a week before the voting of the bid. Lotte Chemical Corp., a South Korean company, had joint ventures with Axiall, so they too inquired about the purchase as a buyer.
Chao states, “This transaction aligns two remarkable companies, creates a company with greater financial and operational flexibility and accelerates our growth strategy. 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.” The deal was approved by both companies and is expected to finalize by December of this year.
Combined, they will represent the third-largest producer of chlor-alkali and the second-largest PVC maker in North America. Westlake makes plastics and vinyls, while Axiall makes building products such as siding, decking and window frames.
Chao said he looks forward to working with Lotte, despite their late inquiry. They will be building an ethylene plant in Lake Charles, Louisiana. Ethylene is the primary chemical in most plastics.
Timothy Mann Jr, Axiall President and CEO, said this was best outcome for shareholders, “We believe this strategic combination will drive significant value for our customers and business partners as we create a North American chlorovinyls leader with a highly integrated chain, diverse product portfolio and a globally competitive cost structure.”
Chao said the two companies complement each other. After a war of words, Gregory Thompson, Axiall’s CFO, asked Westlake to revisit with a new offer and from there, things were much smoother.
Article written by HEI contributor Marcela Abarca.