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MILWAUKEE - Artisan Partners Global Value Team, which manages approximately $35 billion in assets, issued a statement Wednesday strongly opposing the proposed all-stock merger between Axalta Coating Systems Ltd. (NYSE:AXTA) and Akzo Nobel N.V. According to InvestingPro data, Axalta is currently trading at $27.8, significantly below analysts' consensus target price, suggesting the company may be undervalued by the market.
The investment firm, which holds about 1.4 million Axalta shares, criticized the deal announced Tuesday as an "about-face" that contradicts Axalta management's recent statements about the company's strong performance and future prospects. This criticism comes despite Axalta's solid financial position, with InvestingPro data showing the company has been profitable over the last twelve months with $455 million in net income.
In their statement, Artisan Partners highlighted comments from Axalta's third-quarter conference call less than a month ago, where CEO Chris Villavarayan and CFO Carl Anderson touted 12 consecutive quarters of adjusted EBITDA growth, record-low leverage, and plans to repurchase up to $250 million in stock.
The investment team specifically questioned why Axalta would agree to a transaction they characterized as "selling out of a cheap business that is performing well and taking the currency of a company that has never done well."
Artisan Partners cited Akzo Nobel's declining financial performance, noting the company's earnings and adjusted earnings per share are lower over one-, five- and ten-year periods, with what they described as "stagnant" value creation.
"As an Axalta shareholder, we believe the only proper response to this proposed transaction is an absolute and resounding NO," the statement read, according to the press release.
The firm indicated they would be open to discussions with other potential buyers at what they consider a more appropriate valuation for Axalta.
In other recent news, Axalta Coating Systems Ltd. reported its Q3 2025 earnings, exceeding analysts' expectations with an adjusted earnings per share (EPS) of $0.67, compared to the forecasted $0.64. Revenue aligned with projections, reaching $1.3 billion. Additionally, Axalta has announced a planned merger with Akzo Nobel N.V., which will create the second largest global coatings company with approximately $17 billion in annual sales and $3.3 billion in EBITDA for 2024, including synergies. Following the merger announcement, S&P Global Ratings upgraded Axalta to 'BB+' and placed the company on CreditWatch Positive. UBS reiterated its Buy rating with a $39.00 price target for Axalta after the merger deal. However, RBC Capital downgraded Axalta from Outperform to Sector Perform, adjusting the price target to $30.00 from $35.00. KeyBanc maintained its Sector Weight rating on Axalta, noting steady performance despite challenging demand conditions. These developments highlight significant changes and expectations for Axalta's future performance.
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