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Fly News Breaks for June 19, 2019
SHW, AXTA, BRK.A, AKZOY
Jun 19, 2019 | 10:24 EDT
Citi analyst P.J. Juvekar said Axalta is under increased pressure "to deliver on M&A now or risk its credibility" after the company announced it is exploring strategic options again after going through the same process in 2017. Previously the company had M&A negotiations with AkzoNobel (AKZOY) and briefly with Nippon Paints, though neither reached a deal, and this time it could approach new players like Berkshire Hathaway (BRK.A), which already owns roughly 10% of the company, or Sherwin-Williams (SHW), contends Juvekar. Axalta does not have architectural paint, which trades at high multiples compared to industrial paint, and he thinks a multiple range of 12x-13x, equating to a stock price in the mid-to-high $30 range, is possible in a deal, though "there is no guarantee that a deal would happen," Juvekar stated in a note to investor before the open.