WESTLAKE: USD 3.8 bn is the magic number / Latest takeover bid accepted by Axiall / Combined company will become North America’s second-largest PVC producer
After it appeared as though a bidding war might erupt over Axiall (Atlanta, Georgia / USA; www.axiall.com) – with Lotte Group (Seoul / South Korea; www.lotte.co.kr) throwing its hat into the ring (see Plasteurope.com of 09.06.2016) – the company that first bid for the vinyls producer in January this year has emerged victorious. Following several rejections and a series of open letters to Axiall’s shareholders, which culminated in calls for a new board, Westlake Chemical (Houston, Texas / USA; www.westlake.com) on 10 June announced that it had reached an agreement to acquire its “foe-turned-friend for USD 3.8 bn, including debts and other liabilities.
“This transaction aligns two remarkable companies, creates a company with greater financial and operational flexibility and accelerates our growth strategy, Westlake CEO Albert Chao said. Now that all is said and done, Westlake has agreed to withdraw its nomination of a slate of new Axiall directors, which was due to be voted on at the latter’s upcoming annual stockholder meeting on 17 June. Nipping in the bud any potential speculation about problems that might arise with fellow bidder Lotte – which is building an ethane-based cracker in the US together with Axiall (see Plasteurope.com of 04.01.2016) – Westlake said it looks forward to working together with the South Korean group on the joint venture project.
Axiall CEO Timothy Mann added that the combination of the two companies creates “a North American chlorovinyls leader with a highly integrated chain, a diverse product portfolio and a globally competitive cost structure. Once all approvals have been forthcoming – sometime in Q4 this year – the combined company will become North America’s third-largest chlor alkali producer as well as its second-largest PVC manufacturer. A look at PIE’s Polyglobe capacity database (www.polyglobe.net) shows that by adding Axiall’s PVC capacities, Westlake will be capable of producing close to 1.9m t/y of the construction material, placing it behind Shin-Etsu and ahead of Oxychem in the North American market rankings.
The acquisition is expected to yield annual cost synergies of about USD 100m, and the resulting company is expected to post pro forma revenues of USD 7.6 bn and an EBITDA of USD 1.5 bn for the year ended on Q1 2016.
