Artisan Partners Opposes $25B Axalta-Akzo Nobel Merger

A day after Axalta Coating Systems (NYSE: AXTA) agreed to a $25 billion all-stock merger with Dutch rival Akzo Nobel, one of its major shareholders has come out in forceful opposition, threatening to upend a deal that would create a global leader in the coatings industry.

Artisan Partners, a global investment firm, released a sharply worded statement on Wednesday urging Axalta shareholders to reject the proposed "merger of equals." The firm argues the deal significantly undervalues the Philadelphia-based company and trades its strong independent prospects for shares in a historically underperforming acquirer.

The public dissent from a prominent investor introduces significant uncertainty into the merger, which was announced Tuesday and valued Axalta at $47.08 per share—a 67% premium to its closing price on Monday. Axalta's stock saw muted gains following the news, closing at $27.80 on Tuesday, suggesting investor skepticism about the deal's completion or its all-stock structure.

Artisan Partners blasted the Axalta board's decision, calling it an "about-face so severe that I wonder if the members of the Axalta Board of Directors need neck braces." The statement, published via GlobeNewswire, highlighted Axalta's recent performance and optimistic forward guidance as reasons to remain independent. The firm pointed to the company's "12 consecutive quarters of adjusted EBITDA and adjusted EBITDA margin growth" and its record-low net leverage.

The investment firm contrasted Axalta’s operational momentum with what it described as Akzo Nobel's "track record of value stagnation." The statement noted that Akzo Nobel's earnings and adjusted earnings per share have declined over one-, five-, and ten-year periods, asserting that "the only thing growing at Akzo Nobel is the suffering of its owners."

In the proposed transaction, Axalta shareholders would receive 0.6539 shares of Akzo Nobel for each Axalta share. Artisan criticized this arrangement, stating the deal is effectively "selling out of a cheap business that is performing well and taking the currency of a company that has never done well."

This pushback comes at a pivotal moment. The merger, according to the initial announcement, is projected to deliver $600 million in annual cost synergies and create a powerhouse in the industrial and automotive coatings sectors. The companies aim to close the transaction between late 2026 and early 2027, pending shareholder and regulatory approvals.

Artisan’s opposition may create an opening for other suitors. The firm explicitly signaled its willingness to consider alternatives, stating, "Should any other buyers be interested in stepping forward at a price that comes closer... to fair value, we would be very interested in having a conversation." This raises the possibility of a bidding war or forces Akzo Nobel to reconsider the terms of its offer.

The conflict is sharpened by recent statements from Axalta's own management. Artisan quoted CEO Chris Villavarayan's comments from the company's latest earnings call, where he expressed confidence in the business and touted a significant share repurchase plan. "We expect to repurchase a significant amount of Axalta stock given my confidence on where we can take the business in the years to come. I’m more excited than ever," Villavarayan had said.

With a market capitalization of just over $6 billion, Axalta has been a consistent performer in the materials sector. The company has a forward P/E ratio of approximately 10.11 and has generated over $5.1 billion in revenue over the trailing twelve months. Analysts have a consensus price target of $36.81 on the stock, well below the merger's implied value but significantly above its current trading price.

For now, the fate of the deal rests on whether other institutional shareholders, who own over 100% of the company's float, will join Artisan in opposition. The firm's public and aggressive stance ensures that the path to creating a coatings giant will be far from smooth.