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Axalta to Take Over Ellis Paint Company for an Undisclosed Amount

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Axalta acquires Ellis Paint Company

On January 6, 2017, Axalta (AXTA) announced that it had acquired Ellis Paint Company. Axalta didn’t disclose the financial terms of the deal. This acquisition could boost AXTA’s Performance Coatings segment, which reported revenue of $619.3 million in 3Q16 with an adjusted EBITDA (or earnings before interest, taxes, depreciation, and amortization) of $148.5 million.

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About Ellis Paint Company

Ellis Paint Company was founded in 1887. It specialized in the manufacturing and distribution of coatings products suited for an extensive array of industrial applications and substrates including steel, concrete and wood, shipping vessels and construction equipment, and indoor and outdoor furnishings and fittings.

Michael Cash, Axalta’s senior vice president and president of industrial coatings, said, “Ellis Paint’s commitment to providing innovative and sustainable coatings is renowned in the industry and will align well with our focus on technology and business strategy.”

Axalta’s stock price

On January 6, 2017, Axalta closed at $27.60 and rose 1.5% for the week. The iShares U.S. Basic Materials ETF (IYM), which holds 0.9% in AXTA as of January 6, outperformed AXTA with a gain of 1.9% for the week and closed at $84.75. Peers Sherwin-Williams (SHW) and Valspar (VAL) rose 3.8% and 0.3%, respectively, while RPM International (RPM) dropped 1.7% for the same period. AXTA’s stock price traded 2.3% above the 100-day moving average price of $26.97, indicating an upward trend in the stock. Analysts expect AXTA’s 12-month target price to be at $31.20, implying a potential return of 13.0% over the closing price as of January 6, 2017. For 2016, AXTA rose 2.0%.

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