Westlake Increases Axiall Acquisition Price Without Additional Synergies; Lowering Fair Value

Westlake has agreed to acquire Axiall for $33 per share in an all-cash transaction, and the deal has been unanimously approved by the boards of both companies. This follows our prior note that Westlake could raise its offer following Lotte’s bid for Axiall on June 7. We think Westlake is overpaying for Axiall. This transaction is more than 40% higher than its earlier April offer of $14 cash and 0.1967 Westlake shares (approximately $23 total per Axiall share) with no additional synergies expected above the previously announced $100 million per year. Because Westlake would be paying more for Axiall than we think it’s worth, we are lowering our Westlake fair value estimate to $40 per share from $45 previously.