Axalta Coating Stock In Spotlight After Artisan Partners Opposes AkzoNobel Deal — What Are Its Past Campaigns?

• Artisan Partners, less than 1% of Axalta’s outstanding shares, stated that the only proper response to this proposed transaction is “an absolute and resounding ‘NO’.”
• The firm said the deal was essentially selling out of a cheap business “that is performing well” and taking the currency of a company “that has never done well, one that has far inferior assets and financial performance.”
• Its previous campaigns have resulted in the ouster of CEOs at Credit Suisse and Danone.

Artisan Partners Asset Management on Wednesday expressed opposition to the proposed merger between Axalta Coating and Dulux Paint parent AkzoNobel, citing concerns about the deal valuation.

The public criticism by the asset manager comes days after Philadelphia-based Axalta and the Amsterdam-based AkzoNobel agreed to merge in an all-stock deal to create one of the biggest coating makers, with an enterprise value of $25 billion. Under the terms of the agreement, Axalta shareholders are expected to receive 0.6539 shares of AkzoNobel common stock for each share of Axalta common stock they own.

Why Is Artisan Partners Opposing The Deal?

Artisan, which controls 1.4 million shares of Axalta, or less than 1% of the company’s outstanding shares, stated that the only proper response to this proposed transaction is “an absolute and resounding ‘NO’.”

The asset management firm’s global value team stated the deal was essentially selling out of a cheap business “that is performing well” and taking the currency of a company “that has never done well, one that has far inferior assets and financial performance.”

The company compared the financial performance of the two firms, with Axalta’s own admission that it was confident about improving business conditions and that it allocated 90% of its free cash flow to buying back its own shares this year. In comparison, the company noted that AkzoNobel's revenue has declined over the past decade.  

“Should any other buyers be interested in stepping forward at a price that comes closer than 3,240 miles (the distance between Amsterdam and Philadelphia) to fair value, we would be very interested in having a conversation,” the firm said.

Retail sentiment on Stocktwits about Axalta was in the ‘extremely bullish’ territory at the time of writing, compared with ‘bullish’ a day ago.

Previous Campaigns Have Seen Major Ousters

In May 2022, the firm called for the ouster of Credit Suisse's chief executive, Thomas Gottstein, as the Swiss bank struggled to move past scandals and poor operational performance. Gottstein stepped down in July of the same year to be replaced by insider Ulrich Korner. In 2021, Danone ousted its chief executive and was also responsible for a board overhaul.

In recent times, the firm urged the owners of Seven & i Holdings to engage with the Canadian multinational convenience store operator Alimentation Couche-Tard regarding a possible merger. The Canadian firm eventually dropped the bid earlier this year.

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