S.Korea's Lotte Chem bids for U.S. firm Axiall, seen as white knight (updated)

Hanwha Solutions

07/06/2016 05:41

* Axiall seeks to thwart takeover bid by Westlake Chemical 
    * Lotte Chem: Potential deal to help diversify product 
portfolio 
    * Lotte Chemical shares down as much as 4.3 pct 
 
 (Add analyst comment, share price, background) 
    By Joyce Lee and Hyunjoo Jin 
    SEOUL, June 7 (Reuters) - Lotte Chemical Corp  011170.KS  
has made an initial offer to buy U.S. chemicals maker Axiall 
Corp  AXLL.N , coming in as a potential white knight for the 
$1.6 billion firm that is resisting a takeover attempt by 
Westlake Chemical Corp  WLK.N . 
    South Korea's Lotte Chemical, which is building a U.S. 
ethylene cracker in a joint venture with Axiall, announced the 
offer in a regulatory filing on Tuesday but did not provide any 
terms. 
    Axiall, which also makes building products, rejected in 
April Westlake's $3.1 billion buyout proposal, which included 
$1.5 billion in assumed debt, prompting Westlake to seek the 
replacement of Axiall's board.  urn:newsml:reuters.com:*:nL3N1772V1 
    "Lotte Chemical will be seen as a white knight for Axiall," 
said Park Young-hoon, an analyst at LIG Investment & Securities. 
    Lotte Chemical, part of hotel-to-retail conglomerate Lotte 
Group, said in the filing that its proposed takeover would help 
the company diversify its product portfolio and secure a stable 
customer base in North America for the U.S. cracker joint 
venture. 
    The potential deal will help Lotte Chemical become a "global 
integrated chemicals company", it said. 
    Lotte Chemical said Axiall generated at least 2 trillion won 
($1.72 billion) in cash per year, and that it was considering 
various methods to finance the acquisition including cash. 
    Axiall's response to Lotte Chemical's offer was not 
immediately known. A call to Axiall's U.S. office outside  
normal business hours was not answered.  
    Shares in Lotte Chemical were down as much as 4.3 percent on 
Tuesday to their lowest levels in more than four months, weighed 
down by concerns about the price of a possible acquisition.  
    In April, Axiall rejected a revised cash-and-stock offer 
from Westlake Chemical, which was valued at $23.35 per share, an 
increase from a January proposal of $19.94.  urn:newsml:reuters.com:*:nPn8nX2gz 
    Axiall shares last traded at $23.30, giving it a market 
value of $1.64 billion. 
    Late last month, Axiall said it was in talks with third 
parties on options including the possible sale of the entire 
company.  urn:newsml:reuters.com:*:nFWN18N0D6 
    Separately, South Korea's Hanwha Chemical Corp  009830.KS  
said on Tuesday its Hanwha Advanced Materials Corp unit had 
submitted a letter of intent to buy U.S.-based automotive 
materials supplier Continental Structural Plastics (CSP). 
 urn:newsml:reuters.com:*:nL4N18Z02E 
    The deal could be worth about $600 million, the Maeil 
Business Newspaper reported.   
 ($1 = 1,159.7900 won) 
 
 (Reporting by Joyce Lee and Hyunjoo Jin; Editing by Stephen 
Coates and Muralikumar Anantharaman) 
 ((tony.munroe@thomsonreuters.com; +82 2 3704 5640; Reuters 
Messaging: tony.munroe.thomsonreuters.com@reuters.net)) 
 
Keywords: AXIALL M&A/LOTTE CHEMICAL