Westlake Takes Axiall for $2.3 Billion
Westlake Chemical has won the race to acquire compatriot Axiall Corp for $2.33 billion – or $33 per share. The US petrochemical and plastics group based in Houston, Texas clinched the deal for its Atlanta, Georgia-based rival, a vinyls specialist (the former Georgia Gulf) after raising its bid for a third time. The transaction, which is still subject to approval by Axiall shareholders and antitrust authorities, has an enterprise value of about $3.8 billion, including debt and other liabilities. It is expected to close in the fourth quarter.
On the news, Axiall’s share rose to $32.56 after closing a day earlier at $25.81. Together, the two players will be North America's third largest producer of chlor-alkali and second largest producer of PVC, with estimated pro forma revenues of $7.6 billion in and EBITDA of $1.5 billion.
“The combination creates a stronger company with significantly increased scale, greater product diversity and integration throughout the value-chain,” Westlake said in a statement. The Texas producer’s first offer for Axiall, in January of this year, gave the company an enterprise value of $2.9 billion. In March, it upped the ante to $3.1 billion, Discussions became increasingly hostile, with Westlake proposing in April to replace Axiall’s board of directors. The Georgia group then hinted it would consider a higher bid.
In the meantime, South Korean petrochemical group Lotte, which is seeking to expand its US position, also bid for Axiall. Just before Westlake sealed the deal, Lotte Chemical said it had withdrawn the bid, reflecting “the difficult situation” it had faced in Korea recently and “heated competition.
At home, the Korean group is being investigated for its possible participation in a slush fund.
Lotte and Axiall are partners in a joint venture that is building a 1.5 million t/y ethylene ethane cracker in Lake Charles, Louisiana / USA.