Axiall Corp (AXLL) Shares Up 77% on $20/Share Acquisition Proposal


Shares of Axiall Corp (NYSE:AXLL) are up over 77% this morning after it was announced that Westlake Chemical Corporation (NYSE:WLK) has proposed an acquisition of the company for $20 per outstanding share. The offer which would be part cash and part WLK stock and it would represent a premium of over 100% of Axiall’s January 22 closing price.

This would be a huge move for Axiall Corp (NYSE:AXLL), a company that would certainly benefit form a merger with Westlake.

“We are surprised and disappointed by Axiall’s summary rejection of our proposal, which provides Axiall shareholders with a significant premium and upside potential via their participation in the increased scale and synergies of the combined company,” Albert Chao, CEO of Westlake explained. “The combined company would be more diversified and have a stronger financial profile than Axiall, providing it with significant financial and operational flexibility, a greater ability to serve its customers, and improved ability to capitalize on future investment opportunities. We are confident that our proposed transaction represents the best way to maximize value for Axiall shareholders, but despite the attractiveness of our proposal, Axiall has rejected the proposal and refused to engage with us to discuss its merits. Instead, Axiall said it prefers to pursue a standalone strategic plan, but the market reaction to this plan does not suggest it will deliver anywhere near the value and upside of our proposal. In this challenging environment, we believe Axiall’s unwillingness to even discuss our compelling proposal exposes its shareholders to significant risk and uncertainty. Given this response, we feel we have no choice but to bring this proposal to the attention of Axiall shareholders.”

The stock is up 77.04% or $7.55 following the news, hitting $17.35 per share. About 2.21 million shares traded hands or up 33.13% from the average. AXLL has declined 73.89% since June 24, 2015 and is currently downtrending. It has underperformed the S&P500 by 63.69%.

From a total of 4 analysts covering Axiall (NYSE:AXLL) stock, 1 rate it a “Buy”, 1 a “Sell”, and 2 a “Hold”. This means that 25% of the ratings are positive. The highest target price is $37 while the lowest target price is $17. The mean of all analyst targets is $24.60 which is 41.79% above today’s ($17.35) stock price. Axiall was the topic of 13 analyst reports since August 6, 2015 according to the firm StockzIntelligence Inc. Cowen & Co maintained shares on January 6 with a “Market Perform” rating. UBS downgraded AXLL stock in a recent report from September 2 to a “Sell” rating.

The institutional sentiment decreased to 0.82 in Q2 2015. It’s down 0.08, from 0.9 in 2015Q2. The ratio is negative, as 54 funds sold all their Axiall Corp shares they owned while 54 reduced their positions. 31 funds bought stakes while 58 increased their total positions. Institutions now own 79.55 million shares which is 13.16% more than the previous share count of 70.30 million in 2015Q2.

Brigade Capital Management Lp holds 4.26% of its total portfolio in Axiall Corp, equating to 2.21 million shares. Newland Capital Management Llc owns 55,000 shares representing 0.78% of their total US portfolio. Moreover, Bogle Investment Management L P De has 0.61% of their total portfolio invested in the company, equating to 547,819 shares. The New York-based Soroban Capital Partners Lp has a total of 0.6% of their portfolio invested in the stock. Nikko Asset Management Americas Inc., a New York-based fund reported 352,142 shares owned.

Axiall Corporation is a manufacturer and international marketer of chemicals and building products. The company has a market cap of $1.23 billion. The Firm operates through three divisions: chlorovinyls, building products and aromatics. It currently has negative earnings. The Company’s chlorovinyls segment produces a chain of products, including chlor-alkali and derivative products, such as chlorine, caustic soda, vinyl chloride monomer , vinyl resins, ethylene dichloride (or 1, 2 dichloroethane) (EDC), chlorinated solvents, calcium hypochlorite, hydrochloric acid (HCL) and phosgene derivatives, and compound products, such as vinyl compounds and compound additives and plasticizers.