Axalta Coating Systems, the $4 billion-in-yearly-sales, Philadelphia-based automotive-paints giant, is in merger talks with Amsterdam-based AkzoNobel, Axalta confirmed Monday morning.
The company’s statement followed investor speculation that drove Axalta shares sharply higher Friday, when the stock closed at $33.15, up from $28.34 the day before. The price slid partway back, to about $32.30 in morning trading, after Axalta said discussions were underway. The shares remain below last year’s peak, $36.64. In 2014, Axalta was spun off by DuPont Co. at an initial price of $19.50.
Axalta employs more than 13,000 worldwide, with headquarters on Market Street in Center City and offices in Chadds Ford. The company has used research space at the DuPont Experimental Station near Wilmington since separating from DuPont in 2014 and has been planning to consolidate its management and science headquarters in a new facility at the Navy Yard. But the move to Philly could be disrupted by staff cuts if Axalta is folded into the larger AkzoNobel operations and the merged company does not keep two headquarters.
If negotiators find a price that’s in its shareholders’ interest and the board approves a deal, Axalta would combine with AkzoNobel’s Paints and Coatings business, Axalta said in its statement. AkzoNobel posted sales of about $9.5 billion for those business units last year. AkzoNobel is separately planning to spin off its $5 billion specialty-chemicals business.
Although AkzoNobel is larger, Axalta said in Monday’s statement that the pair are talking about a “merger of equals.” Such combinations, including the recent combination of Dow Chemical Co. and the smaller DuPont, can enable companies to avoid federal income taxes on acquisition payments.
Axalta and AzkoNobel have been in talks on and off over the last couple years, as Akzo has maneuvered to escape takeover by Pittsburgh-based PPG Industries in the fast-consolidating global paints and coatings industry. Axalta has refused previous merger offers and has been beefing up operations with at least six acquisitions so far this year, including the April takeover of Valspar Corp.’s wood-coatings business for $420 million.
Billionaire Warren Buffett’s Berkshire Hathaway is Axalta’s largest owner, with almost one-tenth of the stock, followed by the BlackRock and Vanguard fund groups.