The Artisan Partners Global Value Team issued a statement on Wednesday strongly opposing the proposed all-stock merger between Axalta Coating Systems Ltd. (NYSE: AXTA) and Akzo Nobel NV. According to InvestingPro data, Axalta is currently trading at $27.80, significantly below the consensus target price from analysts, indicating that the company may be undervalued by the market.

The investment firm, which holds approximately 1.4 million shares of Axalta, criticized the transaction announced on Tuesday as a "U-turn," contradicting recent statements by Axalta's management regarding the company's strong performance and future prospects. Despite Axalta's solid financial condition and a profit of $455 million over the past twelve months, according to InvestingPro data, it has faced this criticism.

In the statement, Artisan Partners emphasized comments made by Axalta's CEO Chris Villavarayan and CFO Carl Anderson during the third-quarter conference call less than a month ago, where they touted 12 consecutive quarters of adjusted EBITDA growth, record-low leverage, and plans to repurchase up to $250 million in stock.

The investment team specifically questioned why Axalta would agree to a deal they described as "selling a well-performing low-cost business and accepting the currency of a company that has never performed well."

Artisan Partners cited AkzoNobel's declining financial performance, noting that the company's earnings and adjusted earnings per share have decreased over one, five, and ten years, describing its value creation as "stagnant."

"As Axalta shareholders, we believe that the only appropriate response to this proposed transaction is a clear and resounding rejection," the statement in the press release said.

The company stated that they are willing to discuss with other potential buyers solutions they believe are more suitable for Axalta's valuation.

In other recent news, Axalta Coating Systems Ltd. reported its third-quarter earnings for 2025, with an adjusted earnings per share (EPS) of $0.67, exceeding analysts' expectations of $0.64. Revenue reached $1.3 billion, in line with forecasts. In addition, Axalta has announced plans to merge with AkzoNobel, which will create the second-largest paint company in the world, with projected annual sales of approximately $17 billion and EBITDA of $3.3 billion (including synergies) for 2024.

After the merger announcement, S&P Global Ratings upgraded Axalta to "BB+" and placed the company on a positive credit watch list. UBS reiterated its "Buy" rating for Axalta following the merger deal, with a target price of $39.00. However, RBC Capital downgraded Axalta from "Outperform" to "Market Perform," adjusting the target price from $35.00 to $30.00. KeyBanc maintained its "Sector Weight" rating on Axalta, noting that despite challenging demand conditions, performance remains stable. These developments highlight significant changes and expectations for Axalta's future performance.

 

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