A pair of billion-dollar-plus deals grabbed the materials M&A spotlight in the first half of 2016, even as overall deal volume in that sector declined.
Westlake Chemical Corp. in June ended its lengthy hunt for rival Axiall Corp. when Atlanta-based Axiall agreed to a $3.8 billion offer. That deal will create the second-largest PVC producer in North America, and a major manufacturer of vinyl building products.
Under terms announced June 10, Houston-based Westlake will acquire the outstanding shares of Axiall for $33 per share in an all-cash transaction that has been approved by both boards of directors. Axiall had rebuffed an earlier proposal, which had a total value of $3.1 billion.
Combined, Westlake and Axiall will have annual sales of $7.6 billion and a projected $1.5 billion in earnings before interest, taxes, depreciation and amortization.
Axiall has seven chemical sites and four PVC compounding facilities with more than 20 billion pounds of chemical capacity per year. Westlake is a leading olefins producer and the largest integrated low density polyethylene producer in North America. The acquisition also combines two of the largest PVC building product manufacturers in North America: Westlake's North American Pipe Corp. and Axiall's Royal Group Inc.
“We strongly believe the industrial and strategic logic of this transaction is compelling,” Westlake CEO Albert Chao said in a conference call. “The combined company will be a leader in the North American olefins and vinyls business and together will create a larger, more integrated and diverse company.”
The other billion-dollar deal took place March 21 when W.L. Ross Holdings Corp. bought a majority stake in resin distributor Nexeo Solutions in a deal worth almost $1.7 billion.
Nexeo — based in The Woodlands, Texas — distributes resins, compounds and concentrates for more than 20 suppliers, including ExxonMobil Chemical, LyondellBasell, BASF and DuPont Co. About 40 percent of Nexeo's $3.9 billion in sales come from plastics distribution, with the other 60 percent coming from chemical sales.
In a news release, W.L. Ross CEO Wilbur Ross — a well-known U.S. investor — said that his firm “believes that Nexeo is an ideal platform to further roll up the fragmented chemicals and plastics distribution space.”