Axalta Coating Systems Ltd (NYSE: AXTA), the U.S. coatings company whose largest shareholder is Warren Buffett’s Berkshire Hathaway Inc, stock surged 13.59% on June 19th, 2019 and continued its bullish momentum today as the company formed a board committee to explore a sale of the company. The company earned $207 million in after-tax profits on sales of $4.7 billion last year. AXTA currently employs 14,000 at its plants and paint labs worldwide, including its new central research and development facility at the Navy Yard business center and its Americas offices in Glen Mills.
The company’s new “Strategic Review Committee” will be made up of three chemical-industry veterans with much deal experience, independent directors Mark Garrett and Samuel Smolik and chief executive Robert Bryant, the company’s former CFO until he was elevated to the top job last year after two CEOs left in quick succession. Axalta also hired two investment banks, Evercore and Barclays, and the law firm Morrison & Foerster LLP to help figure out what to do. This move was driven by the company’s desire to proactively stay on top of a wave of consolidation sweeping the paints and coatings industry. Axalta’s coatings are used in the refinishing of cars, buildings and pipelines. Its corporate peers include Sherwin-Williams Co, Akzo Nobel, PPG Industries Inc, BASF SE and RPM International Inc.
PPG is currently on an acquisition spree, snapping up smaller coatings companies, while paints maker Akzo Nobel last year decided to focus on its core business by selling its specialty chemicals division Nouryon to buyout firm Carlyle Group LP and Singaporean wealth fund GIC.
Additionally, the board “is committed to maximizing value for all shareholders and has initiated a comprehensive review of strategic alternatives, including a potential sale of the Company, changes in capital allocation,” or not, said Garrett in a written statement, adding that Axalta has been a buyer of other companies in the past.
Under former chief executive Charles Shaver, AXTA had bought six companies in the spring and summer of 2017, before turning down multibillion-dollar buyout offers from rivals ABN Akzo of the Netherlands and Nippon Paint of Japan.
No assurances can be given regarding the outcome or timing of the review process. Axalta does not intend to make any further public comment regarding the review until it has been completed or the Company determines that disclosure is required or beneficial.