JPMorgan Downgrades Axiall To Neutral Following Back-And-Forth Bidding By Westlake

Axiall Corp AXLL shares have appreciated 82 percent over the past four months, as compared to the 8 percent rise for the overall market.

JPMorgan’s Jeffrey J. Zekauskas downgraded the rating on the company from Overweight to Neutral, while raising the price target from $26.50 to $33.00.

Westlake Chemical Corporation WLK made its initial bid of $20 in cash and stock for Axiall in the beginning of February 2016.

The Westlake Bid

“We believed that Westlake was a serious bidder for Axiall based on previous efforts in 2012 to acquire the entity,” Zekauskas stated.

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The analyst expected Westlake to increase its bid, given the significant synergies the combined entity offered.

Westlake announced in mid-February it intended to nominate 10 independent board members to Axiall’s board at the latter company’s 2016 annual meeting.

Revised Bid

On April 1, Westlake made a revised offer of $23.35 or a total of $3.1 billion, including net debt and other liabilities.

According to the JPMorgan report, “On June 6, a Korean newspaper reported that Axiall’s joint venture partner Lotte made a bid to acquire Axiall in an all cash transaction, for a value similar to WLK's $23.35 offer.”

On June 10, Axiall and Westlake announced they had entered into an agreement for the former to be acquired by the latter for $33 per share in cash or a total of $3.8 billion, including net debt and other liabilities.