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Axalta (AXTA) to Acquire U-POL Holdings for $590 Million

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Axalta Coating Systems Limited AXTA recently entered into definitive agreements to acquire U-POL Holdings Limited (“U-POL”) from Graphite Capital Management LLP and other holders. The acquisition is worth £428 million (roughly $590 million), subject to some adjustments. The acquisition is complementary to Axalta’s business and expands its presence in the important and growing mainstream and economy-based refinish segment as well as the consumer do-it-yourself aftermarket.

U-POL is a leading producer of repair and refinish products used mainly for automotive refinish and aftermarket protective applications. It sells its products in over 100 countries and its leading brands include Raptor, Dolphin and Gold.

Axalta is expected to ramp up growth of U-POL’s products by widening the market reach through its existing sales and distribution channels. It will also utilize U-POL's distribution channels to bring its Refinish Coatings portfolio to new consumers.

U-POL’s production plant and R&D lab in Wellingborough, England will enhance Axalta’s ability to serve consumers worldwide. The buyout will enhance Axalta’s commercial, manufacturing and technology organizations.

The transaction is expected to close in the second half of 2021, subject to clearance under applicable antitrust laws and other customary closing requirements.

Axalta expects to realize significant operating and commercial synergies across the combined global businesses. Expected annual operating synergies and efficiencies of roughly $10 million are expected to be fully realized within 18-24 months of closing. U-POL projects net sales of roughly $145 million and adjusted EBITDA of around $38 million for fiscal year 2021.

Shares of Axalta have gained 36.1% in the past year compared with 13.6% fall of the industry.

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Axalta will benefit from cost savings through the implementation of its global restructuring initiative (including streamlining of workforce) and other cost-reduction actions in response to the pandemic. Improving global traffic volumes and continued easing of restrictions are likely to aid its refinish business. The recovery in global automotive production augurs well for the company’s mobility coatings business.

Axalta Coating Systems Ltd. Price and Consensus

Axalta Coating Systems Ltd. Price and Consensus
Axalta Coating Systems Ltd. Price and Consensus

Axalta Coating Systems Ltd. price-consensus-chart | Axalta Coating Systems Ltd. Quote

Zacks Rank & Other Key Picks

Axalta currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Nucor Corporation NUE, Olin Corporation OLN and Cabot Corporation CBT.

Nucor has a projected earnings growth rate of around 386.2% for the current year. The company’s shares have surged 143.3% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Olin has an expected earnings growth rate of around 506.7% for the current year. The company’s shares have skyrocketed 300.7% in the past year. It currently carries a Zacks Rank #2.

Cabot has an expected earnings growth rate of around 137.5% for the current fiscal. The company’s shares have surged 58.2% in the past year. It currently carries a Zacks Rank #2.


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