Tag: Axalta

Categories
Commentary Minority Stock Positions Stock Portfolio Warren Buffett

Commentary: Has the Time Finally Come for Berkshire to Cash Out of Axalta?

(BRK.A), (BRK.B)

Has the time finally come for Berkshire Hathaway to cash out of its minority position in Axalta?

Back in 2015, Berkshire Hathaway acquired roughly 10% minority stake in Axalta Coating Systems from The Carlyle Group for $560 million, or $28.00 per share. Axalta is a leading global coatings provider for vehicles and industrial applications.

Since that time it’s watched its investment flounder, as the Philadelphia-based Axalta fought off being acquired by PPG, and spurned another potential merger with Dutch coatings company Akzo Nobel.

Nippon Paint was another company that was interested in Axalta, only to have the company reject a $9.1 billion all-cash bid that it made near the end of 2017.

2017 was also a year of internal turmoil for the company. Axalta parted ways with its newly hired CEO, Terrence Hahn, after only five weeks on the job. The dismissal came after an internal investigation turned up conduct that Axalta “believes was inconsistent with company policies.”

Chief financial officer Robert Bryant took over as CEO and remains in that position today.

Apparently, Axalta was a company unwilling to be taken over by anyone.

Now, Axalta finally seems ready to enhance shareholder value, and a takeover has become more likely.

“Axalta’s 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, and ongoing execution of our strategic plan,” according to Axalta director Mark Garrett.

With a sale of the company finally on its board’s agenda, could this be the time for Buffett to finally get something for his investment?

Nippon Paint, PPG, and Akzo Nobel are all among the potential players, and the market has quickly recognized that this time may finally be different for Axalta.

Axalta (AXTA) closed on Friday at $29.99, making Berkshire’s stake worth $727,677,360. And it’s now trading above its 52-week high of $30.94 in Friday’s after-hours trading.

Hopefully there’s more good news to come.

Finally.

© 2019 David Mazor


Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Minority Stock Positions Stock Portfolio

Axalta Coating Systems Parts Ways with Newly Hired CEO After Investigation

(BRK.A), (BRK.B)

Axalta Coating Systems Ltd. has parted ways with its recently hired chief executive officer, Terrence Hahn, after only five weeks on the job. The dismissal came after an internal investigation turned up conduct that Axalta “believes was inconsistent with company policies.” The chief financial officer Robert Bryant is taking over as acting chief executive.

Berkshire Hathaway currently owns 24,264,000 shares of Axalta with a current market value of $736,655,040. Some 20 million of those shares were purchased in April of 2015 from The Carlyle Group.

Axalta has repeatedly been a failed takeover candidate, most recently from Nippon Paint.

Previously the company fought an unsolicited takeover from paint company PPG, and also held merger discussions with Dutch coatings company AkzoNobel.

Axalta was founded in 1866 as Herberts, the original producer of Standox paint products. Spun off of DuPont Performance Coatings in 2013, it was sold to The Carlyle Group and renamed Axalta Coating Systems. Today the company is a leader in coatings for commercial vehicles.

When Berkshire took its stake in Axalta back in 2015, the company looked like a possible merger candidate with Berkshire’s Lubrizol. However, Berkshire’s never been shy about owning significant minority stakes in companies if they are purchased at favorable prices.

Unfortunately, with Axalta continuing to lose money, it looks more likely that Berkshire will simply exit its position through a third-party acquisition.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Minority Stock Positions

Axalta to Build Global Innovation Center at The Navy Yard in Philadelphia

(BRK.A), (BRK.B)

Axalta Coating Systems (NYSE: AXTA), a leading global supplier of liquid and powder coatings, announced that it will build its new Global Innovation Center at The Navy Yard in Philadelphia.

The 175,000 square foot facility will house Axalta’s global research, product development, and technology initiatives and partner with the Company’s other technology centers in the Americas, Europe and Asia-Pacific.

The approximately $70 million project is being developed by Liberty Property Trust and Synterra Partners, and Axalta has entered into a long-term lease agreement for the building.

Project construction is expected to be complete in late 2017.

Upon reaching full operation in 2018, Axalta will bring at least 190 new jobs to Philadelphia with the possibility of additional positions in the future.

Axalta’s global corporate headquarters is already located in Center City Philadelphia, and its North America headquarters is located in Glen Mills, Pennsylvania with a customer training center in Exton, Pennsylvania.

Berkshire and Axalta

In April 2015, Berkshire purchased from The Carlyle Group 20 million of Axalta’s common shares for an aggregate purchase price of $560 million, or $28.00 per share.

Originally a unit of Dupont, Axalta is a leading global coatings company “dedicated solely to the development, manufacture and sale of liquid and powder coatings.”

Could the company be a potential acquisition target for Berkshire Hathaway’s Lubrizol Corporation? We will have to wait and see.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.