Westlake Chemical (WLK) Wraps Up Axiall Acquisition
Zacks Investment Research | Sep 01, 2016 07:26AM ET
Westlake Chemical Corp. (NYSE:WLK) has concluded the acquisition of Axiall Corporation in an all-cash deal. Westlake Chemical paid $33 per share in cash, representing an enterprise value, including debt and certain other liabilities, of $3.8 billion.
Subsequent to the acquisition, the combined company will be the third-largest chlor-alkali manufacturer and the second-biggest polyvinyl chloride (PVC) maker in North America. The total pro forma revenue of the combined company is expected to be $7.4 billion, with an adjusted EBITDA of $1.4 billion for the 12-month period ended Jun 30, 2016.
Westlake Chemical expects the transaction to deliver annual cost synergies of roughly $100 million and be accretive to its earnings from the first year itself post closure of the deal. The company is also hopeful that the deal will help improve the financial as well as operational flexibility of the combined company and contribute to the current growth strategy.
For the transaction, Westlake Chemical hired Deutsche Bank (DE:DBKGn) Securities and Goldman Sachs (NYSE:GS) as financial advisors. Cleary Gottlieb Steen & Hamilton LLP was retained for legal counsel and other advisors included MacKenzie Partners.
Westlake Chemical had first announced its intention to acquire Axiall on Jan 29, 2016. The company had proposed acquiring all outstanding shares of Axiall for $20 per share, $11 in cash and 0.1967 of a Westlake Chemical share, which represented a value of $9.00 based on Westlake Chemical’s closing price on Jan 22. The proposal represented a 108% premium to Axiall’s closing price as of Jan 22 but was rejected by the company’s board.
In the second quarter of 2016, Axiall’s revenues declined 10.7% year over year to $776.1 million. Adjusted earnings in the quarter fell 75.5% year over year to 12 cents per share. The company ended the quarter with cash and cash equivalents of 124.8 million, and long term debt of $1,367.3 million.
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