Yesterday, 3:27 PM
- In a dig at Third Point's Daniel Loeb, Dow Chemical (DOW +3.2%) CEO Andrew Liveris says his company's decisive move to shift out of the commodity chemicals business shows how “Dow continues to behave as our own best activist.”
- Dow's deal to sell its chlor-alkali business to Olin (OLN +18.2%) in exchange for $2B and a 50.5% stake in the smaller company will create the world’s largest chlorine producer with 5.7B tons/year of production and $1B in EBITDA.
- Citigroup’s P.J. Juvekar offers three reasons why the deal is good for shareholders: The chlor-alkali divestiture at 8x EBITDA is a great multiple for a commodity business, the Reverse Morris Trust deal makes it tax-free and a split-off will allow Dow to buy back its own shares efficiently - a similar move by PPG Industries was viewed very positively two years ago, and Dow will sell ethylene to OLN for 20 years and will receive an upfront payment of ~$400M.
- Dow may still get rid of its agricultural chemicals business, which does not have a lot in common with the rest of the business; with $7.3B in sales and almost $1B in EBITDA last year, the unit could be worth $10B.
- Juvekar says Axiall (AXLL +5%) also could benefit from the deal, seeing consolidation in the U.S. chlor-alkali industry as a positive, and OLN says it will look to optimize its expanded chlor-alkali asset base.
Mon, Mar. 23, 12:50 PM
- Olin (OLN -3.8%) is downgraded to Sell from Neutral with a $25 price target at UBS, which says the sum of the parts argument for OLN following the Vista Outdoor spin is less compelling the higher the stock moves, and the firm believes channel inventory declines have not bottomed yet.
- While OLN made positive comments about the potential for a chlorine/caustic recovery on its Q4 earnings call, the sentiment was not echoed by competitors Axiall (AXLL -1.2%) and Westlake (WLK +0.5%), and Dow Chemical (DOW +0.1%) is selling its operations partly because of depressed results.
- UBS views chlor-alkali as a shale gas advantaged business, where supply has increased in recent years, plus the natural gas advantage has declined with the fall in oil prices.
Thu, Feb. 19, 10:46 AM
- Axiall (AXLL +3.2%) says during its Q4 earnings conference call that it has been studying the possibility of creating a Chlor-Alkali MLP "as an opportunity to access low-cost capital and generate shareholder value," and has filed a ruling request with the IRS to determine if Chlor-Alkali qualifies.
- AXLL saysit would finalize a feasibility study about the creation of an MLP if it receives a favorable ruling.
- AXLL also says it will move its investment decision on a cracker to Q1 to allow time for additional analysis and clarity.
- Earlier: Axiall beats by $0.03, misses on revenue
Sep. 25, 2014, 2:08 PM
- Dow Chemical (DOW -0.4%) has begun the process of selling its epoxy and chlorine businesses, and has hired Goldman Sachs and Barclays to manage the sale, Reuters reports.
- The combined epoxy and chlorine businesses have annual EBITDA of close to $500M, and initial estimates place their combined value at $3.5B-$4B.
- Logical buyers, according to the report, could include companies in the sector such as Axiall (AXLL -2.3%) and Westlake Chemical (WLK -2.2%), as well as P-E firms experienced in chemicals such as Apollo Global (APO -1.5%).
Jul. 10, 2014, 11:24 AM
- After Axiall's (AXLL -3.1%) second straight negative earnings pre-announcement, Citigroup says investor patience is running thin and that an activist or an acquirer could take a look at the company.
- Citi thinks LyondellBasell (LYB) “could afford” to take a look at AXLL, but notes that LYB has stated its preference for returning cash to shareholders over acquisitions; the firm cuts its AXLL price target to $48 from $49 and keeps a Neutral rating on the stock.
- Cowen analysts say they would use any weakness in AXLL following the pre-announcement as a buying opportunity, seeing stronger PVC prices heading into Q3, due in part to competitor ethylene outages that could constrain PVC production.
Jul. 9, 2014, 5:23 PM
- Axiall (AXLL) -3.8% AH after reporting that its PHH vinyl chloride monomer manufacturing facility in Lake Charles, La., has returned to full operating rates, but the slow ramp up will result in lower than expected sales volumes and higher operating and maintenance costs during Q2.
- Also, AXLL says it saw normal seasonal increases in U.S. building products sales volumes during Q2 along with weaker Canadian sales and the impact of a weaker Canadian dollar; operating income results in the aromatics segment will come in ~$12M lower than the year-ago Q2 due to lower operating rates and lower margins.
Apr. 14, 2014, 6:38 PM
- Axiall (AXLL) -1.9% AH after saying it expects Q1 will be hit by three significant headwinds: repairs at its Lake Charles, La., chemicals facility; severe winter weather; and a Q/Q increase to normal maintenance spending.
- Damage from the December 2013 fire at the PHH vinyl chloride monomer manufacturing facility at the Lake Charles chemicals complex has been repaired and the facility has resumed operations, but the facility is not expected to reach full operating rates until May.
- AXLL expects to report Q1 EBITDA of $65M-$70M.
Apr. 14, 2014, 5:53 PM
Mar. 24, 2014, 12:18 PM
- Axiall (AXLL +1.9%) is upgraded to Buy from Neutral with a $52 target price at BofA/Merrill, which expects price increases in the PVC resin market more than offsetting potential weakness in caustic soda over the next 12-24 months.
- After $0.06/lb. in price increases in January-February, the firm sees PVC prices rising another $0.02-$0.03/lb in March; the PVC hikes also are translating into higher prices in the downstream building products business.
- BofA views AXLL as a beneficiary of a strong construction season in 2014 and further normalization in U.S. residential and nonresidential construction in 2015-16.
Mar. 6, 2014, 12:52 PM
- Axiall (AXLL +9.9%) is upgraded to Buy from Neutral with a $60 price target, raised from $45, at Goldman Sachs, which believes bad news is priced in the share price and earnings could double.
- AXLL shares have dropped sharply over the past year, and the firm says the current price more than reflects headwinds; lower caustic prices from new industry supply, higher natural gas costs, ethylene contract resets, arrested PVC margins, Aromatics oversupply, and operational issues are now widely known.
Feb. 21, 2014, 5:37 PM
Feb. 10, 2014, 6:30 PM
- Axiall (AXLL) +7.6% AH as it joins with Korea's Lotte Chemical to announce an agreement to pursue a 50/50 joint venture arrangement for the design, construction and operation of a proposed 1M metric ton/year ethane cracker to be located in Louisiana.
- The companies expect to jointly award a front-end engineering design contract for the cracker in Q1 2014.
Dec. 2, 2013, 2:24 PM
- Investors applaud Dow Chemical's (DOW +2.9%) move to explore a spinoff or sale of its commodity chemical business - part of its original founding business from the late 19th century - which could generate up to $3B; it's part of Dow’s ongoing efforts to shift toward higher-margin products and technologies.
- Dow already had divested itself of ~$700M YTD; CEO Andrew Liveris had said DOW was planning to dispose of up to $4B in assets over the coming 12-24 months, and the chlorine spinoff plan means an increase in that estimate.
- The move will help the stock price and valuation over the next six to 12 months, Argus says, since Dow has tended to have a slightly lower valuation because investors want to see less of a commodity company and more of a specialized one.
- North American chlor-alkali producers Axiall (AXLL +9.6%), Olin (OLN +7.5%) and Westlake Chemical (WLK +1.8%) are higher on Dow's plan to close 800K tons of caustic and chlorine capacity, which analysts see as a positive for merchant sellers of caustic as it offsets the new capacity from the Dow-Mitsui joint venture.
Jun. 5, 2013, 2:12 PMAxiall (AXLL +3.1%) gets a boost from a BofA initiation at Buy (price target $56). Analyst Aleksey Yefremov says the company should benefit "from the US housing recovery with 47% of sales directly tied to the industry and another 20% indirectly." In May, the shares suffered a nasty sell-off after high ethylene costs and lower resin sales prices conspired with a decrease in sales in the building products division to hurt quarterly results. | 2 Comments
May. 8, 2013, 1:19 PMShares of Axiall (AXLL -16.2%) plummet after earnings miss estimates by a wide margin. The acquisition of PPG's chlorine assets was largely responsible for an $88.6M increase in adjusted EBITDA from Q1 2012 in the Chlorovinyls segment (which accounts for most of the firm's sales), but relatively high ethylene costs and lower resin sales prices conspired to offset the gains. Meanwhile, net sales decreased in both the Building Products and Aromatics segments. (PR) | Comment!
May. 8, 2013, 12:53 PM
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