Adds Axalta statement under the 'Details' section
By Svea Herbst-Bayliss
NEW YORK, Nov 19 (Reuters) - Investor Artisan Partners is unhappy with Axalta Coating Systems' plans to combine with AkzoNobel in an all-stock deal that will create a paint industry giant with an enterprise value of $25 billion.
"As an Axalta shareholder, we believe the only proper response to this proposed transaction is an absolute and resounding 'NO,'” Artisan Partners fund managers Daniel O'Keefe and Michael McKinnon wrote in a letter to Axalta shareholders.
The pair said they would be interested in speaking with any other interested buyers.
THE DETAILS
Artisan Partners wrote that Axalta's decision to combine with AkzoNobel came out of the blue
Axalta executives told investors on the third-quarter earnings call that it made sense to allocate all free cash flow to share repurchases, Artisan's letter said.
Axalta executives said they "expect to repurchase a significant amount of Axalta stock" based on management's confidence in where the business can go in coming years.
"We are confident that our pending merger with AkzoNobel represents the best alternative to drive substantial long-term growth and value creation for Axalta shareholders," Axalta said in a statement.
Axalta specializes in industrial and car coatings and went public in 2014.
Previous deal talks with AkzoNobel failed in 2017.
AkzoNobel CEO Greg Poux-Guillaume will become CEO of the combined company.
THE NUMBERS
Axalta's stock has dropped roughly 15% this year.
Artisan is a small investor in Axalta.
The Artisan letter said AkzoNobel's "numbers speak for themselves. This is a company whose earnings and adjusted earnings per share are lower over one-, five- and ten-year periods."
AkzoNobel did not immediately respond to a request for comment.
(Reporting by Svea Herbst-BaylissEditing by Rod Nickel and Stephen Coates)
((svea.herbst@thomsonreuters.com; +617 233 2138; Reuters Messaging: svea.herbst.thomsonreuters.com@reuters.net/))