Shares of Axalta Coating Systems Ltd. (NYSE: AXTA) were up almost 17% at $33.15 on Friday, with the driving force being merger talks with Akzo Nobel. Now at least part of those merger discussions have been confirmed, and it seems the two companies are looking at a merger of equals.
While a merger of equals does not usually imply major premiums, this would create a multibillion-dollar leader in the industry of coatings and paints. After Friday’s gain, Axalta is an $8 billion company by market cap.
Axalta shares were up almost 17% at $33.15 on Friday, with a 52-week high of $33.47 being put in on the preliminary reports. Axalta shares were up only 1.1% at $32.76 Monday morning.
Analysts in the Thomson Reuters universe had a consensus analyst price target of $31.88 for Axalta prior to merger reports.
Shares of Akzo Nobel are traded in Europe, and the company has its headquarters in Amsterdam, Netherlands. Its market cap is about ¢20 billion.
Axalta and Akzo Nobel have both issued statements in confirming the market reports.
The Axalta statement said:
Axalta today confirmed that it is engaged in discussions with AkzoNobel regarding a potential merger of equals transaction between Axalta and Akzo’s Paints & Coatings business. Axalta will pursue such a transaction only if its Board of Directors determines that it is in the best interest of Axalta to do so. There can be no assurances that a definitive agreement between the parties will be reached or on what terms.
The Akzo Nobel statement said:
In response to market speculation, AkzoNobel confirms today it is currently in constructive discussions regarding a merger of the AkzoNobel Paints & Coatings business with Axalta. This will create a leading global paints & coatings company through a merger of equals… AkzoNobel confirms that its separation of Specialty Chemicals, including the return of the vast majority of net proceeds to shareholders, remains on track for April 2018 and is unaffected by these discussions.