Axalta to Acquire U-POL
Global liquid and powder coatings supplier Axalta Coating Systems Ltd. recently announced a definitive agreement to acquire U-POL Holdings Limited (U-POL) from Graphite Capital Management LLP and other holders.
Based in the United Kingdom, U-POL was founded in 1948 and is reported to be a leader in paint, protective coatings and accessories manufacturing for the automotive market. Specifically, the company manufacturers repair and refinish products used primarily for automotive finish and aftermarket protective applications.
U-POL is also reported to produce a wide range of high-quality automotive refinishing products and accessories including fillers, coatings, aerosols, adhesives and paint related products as well as other automotive aftermarket protective coatings. Currently, U-POL sells its products in over 100 countries and is widely known for its leading brands, including Raptor, Dolphin, and Gold, among others.
“Axalta is the world leader in the premium refinish coatings segment. U-POL’s expertise in refinish accessories and protective coatings is highly complementary to Axalta’s business and expands our addressable market into the important and growing mainstream and economy-based refinish segment as well as the consumer do-it-yourself aftermarket,” said Robert Bryant, Axalta’s Chief Executive Officer. “We also see opportunities for U-POL’s technology in whitespace applications for other areas of our business, including Mobility and Industrial Coatings.”
Axalta will accelerate growth of U-POL’s products by expanding market access through Axalta’s existing sales and distribution channels while leveraging U-POL’s distribution channels to extend the reach of its Refinish Coatings portfolio to new customers.
U-POL expects net sales of approximately $145 million and adjusted EBITDA of approximately $38 million for fiscal year 2021. Axalta expects to realize meaningful operating and commercial synergies across the combined global businesses. Expected annual operating synergies and efficiencies of approximately $10 million are expected to be fully realized within 18 to 24 months of close.
The total consideration of approximately $590 million reflects a full year 2021E adjusted EBITDA multiple of approximately 12.5x, including run rate operating synergies and efficiencies. Additionally, the identified commercial synergy opportunities are expected to create significant value over time. Axalta expects the acquisition to be immediately accretive to adjusted EBITDA margin, excluding transaction-related costs associated with the acquisition. Axalta plans to finance the transaction from cash on hand.
In addition to sales, Axalta reports that U-POL’s global organization, as well as its manufacturing plant and research and development lab in Wellingborough, England, will bring important capabilities to the company’s commercial, manufacturing, and technology organizations, ultimately enhancing Axalta’s ability to serve its customers across the globe.
“The two companies’ cultures of innovation, quality, and strong operating principles are exceptionally aligned,” said Troy Weaver, Axalta’s Senior Vice President, Global Refinish Coatings. “We look forward to serving customers with these additional capabilities and to welcoming U-POL’s dedicated team members to the Axalta family.”
Axalta is slated to acquire U-POL for 428 million euros (approximately $590 million) within the second half of 2021. The transaction is subject to clearance under applicable antitrust laws, other customary closing requirements and certain adjustments set forth in the Sale and Purchase Agreements.