NEW YORK – Investor Artisan Partners has voiced strong opposition to Axalta Coating Systems’ proposed all-stock merger with AkzoNobel, calling for shareholders to reject the $25 billion deal that would create a global paint and coatings powerhouse.

In a letter to Axalta shareholders, Artisan Partners fund managers Daniel O’Keefe and Michael McKinnon wrote, “As an Axalta shareholder, we believe the only proper response to this proposed transaction is an absolute and resounding ‘NO.’” The investor group also expressed openness to discussions with alternative buyers, signaling a preference for other strategic options to enhance shareholder value.

Concerns Over Merger Rationale

Artisan Partners highlighted that the merger announcement came unexpectedly and questioned the strategic rationale behind Axalta’s decision. According to the letter, Axalta executives previously emphasized during the third-quarter earnings call that allocating free cash flow toward share repurchases made sense, reflecting management’s confidence in the company’s standalone prospects.

Axalta executives had stated, “We expect to repurchase a significant amount of Axalta stock based on management’s confidence in where the business can go in the coming years.” Despite this, Artisan Partners contends that merging with AkzoNobel may not deliver the promised long-term growth.

In response, Axalta emphasized that the merger represents the “best alternative to drive substantial long-term growth and value creation for Axalta shareholders.” Under the merger plan, AkzoNobel CEO Greg Poux-Guillaume will lead the combined entity.

Financial Performance and Historical Context

Artisan Partners also cited AkzoNobel’s historical financial performance as a concern. The investor letter noted that AkzoNobel’s earnings and adjusted earnings per share have been lower over one-, five-, and ten-year periods, raising questions about the company’s ability to generate consistent long-term value.

Axalta, which specializes in industrial and automotive coatings, went public in 2014 and has seen its stock decline roughly 15% this year. The merger proposal with AkzoNobel follows previous unsuccessful talks between the two companies in 2017.

Industry Implications

If approved, the merger would create a significant player in the global paint and coatings industry, potentially impacting competition, supply chains, and pricing dynamics across multiple markets. However, the strong opposition from key investors like Artisan Partners underscores the challenges Axalta may face in gaining shareholder approval.

AkzoNobel has not immediately responded to requests for comment.