MOSCOW (MRC) -- Axiall Corp. jumped the most in almost four months after South Korea’s Lotte Chemical Corp. made a takeover offer, raising the prospect of a bidding war for the U.S. maker of vinyl and polyethylene, said Bloomberg.
While Lotte didn’t disclose terms of the possible deal, the enterprise value may be close to USD3.1 billion, according to a report Tuesday by RBC Capital Markets, which didn’t say where it got the information. That works out to USD27.40 a share, compared with an offer of USD23.35 from Westlake Chemical Corp., RBC said.
Axiall is casting about for suitors as Westlake tries to replace nine of the target company’s directors with its own nominees in a June 17 proxy contest. After Westlake’s unsolicited January bid was rejected, the company sweetened the offer in March. Axiall said the price was still too low and the two sides blame each other for ending talks.
"The acquisition price may go higher as Lotte has to compete with Westlake," said Lee Ji Yeon, an analyst at IBK Securities. "In terms of diversifying its business, it’s good news for Lotte."
Axiall climbed 8.8 percent to close at USD25.35 in New York, its biggest gain since Feb. 16. Westlake rose 1.4 percent to USD46.27. Lotte Chemical fell 3.5 percent to close at 260,500 won (USD224.03) in Seoul.
The "board has not made any decisions concerning the Lotte offer," according to an Axiall letter to employees contained in a corporate filing. The company didn’t include any details of the proposal.
Westlake and Axial didn’t return requests for comment.
As MRC informed earlier, Lotte formed a venture with Axiall last year to build a plant for making ethylene in the U.S., with production to start in 2018. The South Korean company submitted a plan to acquire Atlanta-based Axiall on June 3, according to a regulatory filing.
Axiall would expand Lotte Chemical’s products to include polyvinyl chloride and chloro-alkali, while helping secure a foothold in the U.S. market, the South Korean company said in a statement.
Lotte Chemical is a member of the Lotte Group in Korea, which has been listed on the Korean Stock Exchange since 1991. Lotte Chemical is a leading manufacturer of petrochemical products, such as ethylene, propylene, butadiene, polyethylene, polypropylene, ethylene oxide/glycol, compound resin, polyethylene terephthalate, polycarbonate, methyl methacrylate, ethylene oxide derivatives, benzene, toluene, mixed xylene, purified terephthalic acid and purified isophthalic acid among others. Lotte Chemical, headquartered in Seoul, South Korea, has manufacturing facilities located throughout South Korea, China, Malaysia, Indonesia, Pakistan, UK and the USA.
Axiall Corporation is a leading integrated chemicals and building products company. Headquartered in Atlanta, Axiall has manufacturing facilities located throughout North America and in Asia to provide industry-leading materials and services to customers.
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