Axalta Coating Systems, a global manufacturer of coatings for the auto and transportation industry, announced terms for its IPO on Thursday. Private equity owner Carlyle plans to raise $878 million by offering 45 million shares (100% insider) at a price range of $18 to $21. At the midpoint of the proposed range, Axalta Coating Systems would command a fully diluted market value of $4.7 billion and enterprise value of $8.3 billion.
Business
Carlyle bought Axalta from DuPont in February 2013 for $4.9 billion. Earlier filings suggested both the company and Carlyle would sell shares on the IPO.
Axalta's end markets for its high-performance liquid and powder coatings are divided into refinishing (body shops; 42% of sales), industrial (insulation, oil and gas pipes; 17%), light vehicle (automotive; 32%) and commercial vehicle (Bus, rail; 9%). Axalta claims it targets a $37 billion market dominated by it and three other suppliers - PPG (NYSE: PPG), Akzo Nobel and BASF. The IPO candidate boasts that it has the #1 global market position in the refinishing market, providing waterborne and solventborne coatings to about 80,000 independent body shops, dealers and multi-shop operators.
Recent financials
Pro forma revenue grew 3% to $2.2 billion for the six months ended June 30, 2014 due to favorable product mix and price increases, partially offset by lower volume in Latin America. Axalta's gross profit margin improved 280 bps to 34% because of lower raw materials costs. Adjusted EBITDA increased 18% to $408 million (18.6% margin), which the company attributes to operational improvements. With $3.9 billion in debt (4.9x LTM adjusted EBTIDA), Axalta paid $114 million in interest expense during the 1H14 for a net income of $50 million.
Auto IPOs
2014 has seen two auto-related IPOs, TrueCar (TRUE, up over 85% from the IPO price) and Mobileye (MBLY, up over 100%). Another LBO'd auto components retailer, ATD (ATD.RC), filed in June for an IPO that could raise $500 million.
The Philadelphia, PA-based company, which was founded in 1866 and booked $4.4 billion in sales for the 12 months ended June 30, 2014, plans to list on the NYSE under the symbol AXTA. Citi, Goldman Sachs, Deutsche Bank, J.P. Morgan, BofA Merrill Lynch, Barclays, Credit Suisse and Morgan Stanley are the joint bookrunners on the deal. It is expected to price during the week of November 10, 2014
