Chemical News: Axalta Will Buy Century Industrial Coatings

On February 1, 2017, Axalta (AXTA) announced that it entered into an agreement to acquire Century Industrial Coatings. However, Axalta didn’t disclose the financial terms of the transaction. If the acquisition is completed, Axalta is expected to integrate the revenues generated from the acquisition under its Performance Coatings segment. The segment reported revenue of $619.3 million in 3Q16 with an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $148.5 million.

Century Industrial Coatings was established in 1966. It’s a leading manufacturer of high-performance industrial coatings for structural steel, oil and gas, rail cars, and other OEM applications. The company’s well-known products include CenturyGuard water-based primers, Century Extreme epoxy and polyurethane coatings, and Century EcoExtreme.

On February 3, 2017, Axalta closed at $29.66 and rose 1.5% for the week. The iShares U.S. Basic Materials ETF (IYM), which holds 1.1% in Axalta as of February 3, underperformed Axalta. IYM lost -0.8 % for the week and closed at $87.50. Peers Sherwin-Williams (SHW), Valspar (VAL), and RPM International (RPM) fell 0.4%, 0.35%, and 2.7% for the same period. Axalta’s stock price traded 9.7% above the 100-day moving average price of $27.03. It indicates an upward trend in the stock. Analysts expect Axalta’s 12-month target price to be $31.20. It implies a potential return of 5.0% over the closing price as of February 3, 2017.