Warren Buffett’s Berkshire Hathaway has entered an agreement to purchase $560 million of stock in Axalta Coating Systems from subsidiaries of Carlyle Group LP as the mega-conglomerate continues to increase its exposure to the industrial and auto sectors.
Berkshire will purchase 20 million shares for $28 each, very close to Monday’s closing price of $28.33. According to the statement released Tuesday morning, Omaha-based Berkshire has agreed to not sell the shares for at least 90 days.
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Axalta was up around 6% to $30.02 on the news in morning trading on the NYSE.
Statement from Axalta CEO
“Berkshire is the type of quality investor that Axalta has been fortunate to attract since our IPO last year. We believe this investment shows Berkshire’s support of our strategy to reshape ourselves into a growth and customer oriented, world class coatings company,” Charlie Sharver, CEO of Axalta commented in a statement on Tuesday.
More on Berkshire Axalta deal
Axalta shares had already been on a nice run, up more than 45% as of Monday since their $19.50 a share IPO late last year. PE firm Carlyle sold 50 million shares in the initial public offering, and was up more than 300% on its investment at the time. Of note, Carlyle snapped up Axalta from DuPont back in February of 2013 for $4.9 billion (with $1.35 billion of equity). DuPont’s was divesting assets so as to focus on faster growing divisions in the firm.
The leader in the coatings industry brought in $4.39 billion of revenue last year, and is the largest global supplier of coatings to auto-repair shops and the second-largest supplier to car makers.
The Axalta stake is just the latest in a string of Buffett acquisitions in the industrial and auto sectors. Buffett’s company owns lubricant firm Lubrizol and has a significant stake in Precision Castparts, a manufacturer of aerospace components. Berkshire also acquired paint manufacturer Benjamin Moore, a leader in the residential paint sector, some time back.