On Friday, Westlake Chemical Corporation (NYSE: WLK) and Axiall Corp (NYSE: AXLL) announced that they have entered into a definitive agreement under which Westlake Chemical will acquire all of the outstanding shares of Axiall for $33.00 per share in an all cash transaction, representing an enterprise value of around $3.8 billion, including debt and certain other Axiall liabilities. Shares of Axiall jumped up 25.86% to $32.49 on Friday morning while Westlake Chemical increased 2.35% to $46.12.
Timothy Mann, Jr., Axiall’s President and Chief Executive Officer, commented, “We are pleased to have reached this agreement with Westlake, which provides our stockholders with immediate recognition of the long-term value of our company, underscoring our Board’s commitment to maximizing stockholder value. 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. We look forward to working closely with the Westlake team to ensure a smooth transition and complete the transaction as expeditiously as possible.”
In January, Westlake Chemical first offered Axiall $1.4 billion, or $20 per share in stock and cash. That offer was worth about $2.9 billion including debt. Axiall rejected that bid as too low.
Earlier this week, South Korean conglomerate Lotte Chemical Corp (KRX: 011170) disclosed that it had submitted an unsolicited bid for Axiall, probably providing the impetus for Westlake Chemical to work fast and complete the deal.
After the acquisition, the combined company will be the third-largest chlor-alkali producer and the second-largest PVC producer in North America, with expected combined pro forma revenues of $7.6 billion and EBITDA of $1.5 billion for the last 12 months ended the first quarter of 2016. This acquisition creates a stronger company with significantly increased scale, greater product diversity and integration throughout the value chain. Westlake Chemical expects the transaction to be accretive to its earnings in the first year following close and expects annualized cost synergies of approximately $100 million based on its estimates.