Westlake Chemical Corporation Case Study

Great Essays
Introduction Hostile takeover proposals increased in 2015, worth over 14% of all mergers and acquisitions transactions (Wieczner, 2015). The same trend continued in 2016 as more companies continued to pursue hostile takeover plans. Hostile takeovers occur when corporate managers propose to buy the entire stock of the targeted company at a low price and restructure the company. Through restructuring, most employees lose their jobs and most assets are disposed to make the balance sheet attractive. The share price of the acquired company then rises, and the corporate raiders enjoy higher market value of their new company.
Westlake Chemical Corporation’s Hostile Takeover of Axiall Corporation
In early 2016, the Houston-based chemical company,
…show more content…
After the rejection of the proposal by Axiall’s management, Westlake made a proposal to the company’s shareholders through the board of directors. The proposal highlighted the benefits of the takeover to the company’s shareholders. They suggested that the standalone strategic plan of Axiall may not deliver the value and upside of the takeover proposal. Westlake managers also suggest that the challenging environment poses significant uncertainties and risks to the Axiall shareholders. The combined company would solve these problems by enhancing a stronger financial profile, ability to seize future investment opportunities, ability to serve customers more effectively, and improved financial flexibility. Westlake Corporation also wrote a letter to employees to inform them of these benefits and urge them to avoid discussing the proposal with outsiders.
The takeover was completed in August at $33 per share, a total of $3.8 billion including debt and liabilities. The acquisition was received by shareholders as a crucial way to enhance financial and operational flexibility and accelerate
…show more content…
The company recorded $4.6 billion revenue in 2015, and a balance sheet asset value of $4.5 billion (Securities and Exchange Commission, 2015). The company also has a large competent employee base and a strong strategic plan led by a competent team of management. The company also has a strong marketing network operating globally, hence reaching wide market coverage.
Weaknesses
The company made losses of approximately $837 million (Securities and Exchange Commission, 2015). It also has a huge debt of 1.3 billion which creates a negative image on its balance sheet. Shareholders’ value is also low as the share price was only $9 in January before the takeover bid from Westlake.
Opportunities
There are opportunities of growth in the manufacturing industry through acquisitions, strategic alliance, and partnerships. There are also opportunities in new investments in new business portfolios. Furthermore, technological advancements in manufacturing industry give an opportunity of improving operations and serving customers more

Related Documents

  • Decent Essays

    Good Morning, my name is Adam McNamara and I am a senior adviser for Imperial Financial Advisors. As Oliver has already said I will be analysing Dick Smith. Today I will share with you a brief history of the company, the main Deviations from the market in the last six months, the key financial data of Dick Smith, the Buy/Sell Decision, Dick Smith compared with Quickflix and research and observation.⇒ Dick Smith started as a very small business in 1968 and started with only having a capital of six hundred and ten dollars and only one store. When the store initially opened it focused on installing and fixing car radios, then soon widened to catering the needs of electronic hobbyists, In 1982 Woolworths bought the business and ran it for 30 years before selling 98 per cent of…

    • 805 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    The company's management and partners had an estimate of making profits from its operations by the year 2021. However, by the year 2015 it had made a loss of 2.1 billion US Dollars making it impossible to pay its employees in January 2015. It was, however, able to…

    • 323 Words
    • 2 Pages
    Decent Essays
  • Improved Essays

    Target Financial Analysis

    • 786 Words
    • 4 Pages

    Conclusion Target When looking at the cover brand of Target, it is easy to assume that they are excelling quicker than many other retailers. After applying the balance sheet and income statement to the ratios, I found that Target is not as embellished as I once thought. I will show you what I found looking at the liquidity, debt management, asset management and, and profitability ratios and why it is a good time to buy Target stocks. Before I start with my analysis, I would like to point out years 2014 and 2015 in the Target Corporation.…

    • 786 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    In 1976, the company began to shift focus to clothing and luggage and from that point on was on the front end of many business, and retail, innovations. In 2002, the company was sold to Sears, Roebuck & Company for 1.9 billion dollars. Earlier in this year Lands’ End spun-off from Sears, Roebuck & Company and became once again a publically traded company. In reviewing Standard & Poor’s NetAdvantage application the company’s strengths and weaknesses are highlighted.…

    • 443 Words
    • 2 Pages
    Improved Essays
  • Improved Essays

    Verizon Case Summary

    • 834 Words
    • 4 Pages

    Assessment of detection risk by performing substantive analytics related to consolidation policy and substantive procedures related to management assertions, and brainstorm of potential fraud and extended procedures. Substantive analytical procedures related to consolidation policy Based on the preliminary analytical procedures about ratios and account balances, I found some risk areas and great changes from 2013 to 2014 in financial statements such as the net income, investments in unconsolidated businesses, cash and cash equivalents, contributed capital, and non-controlling interests. After the review of the 10-k form, I found that the consideration paid for acquisition of Verizon Wireless was primarily comprised of cash and Verizon common…

    • 834 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Based on the balance sheet it is clear that the amount of stock available at the end of 2011 was considerably higher than what was observed at the end of 2012. The heavy retention of closing stock meant reduced revenue at the close of 2011 compared to the huge profit realized in 2010. Based on the balance sheet we can see that the company is avoiding tax payment, which indicates a lack of funds or presence of poor decision-making on the part of…

    • 642 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    The Department reviewed audited financial statements provided by First Guaranty Mortgage Corporation for year-end 2014 and 2015. Richey May & Co. completed the independent audits in accordance with generally accepted accounting principles. The financial analysis is based on a review of the stated financial condition of the company and should not be considered an attestation regarding the validity of the figures. Capital The capital position of the Licensee appears satisfactory.…

    • 865 Words
    • 4 Pages
    Improved Essays
  • Decent Essays

    Pridebites is a company that designs one of a kind products for dogs. Two young entrepreneurs pitched this great idea. Pridebites is a great company it has extremely high sales for the short time it has been operating. This company concept is incredibly smart due to the fact that almost everyone on this planet owns a dog. Also it is already in retail stores which is one of the hardest things to do.…

    • 418 Words
    • 2 Pages
    Decent Essays
  • Improved Essays

    Case write-up I: Danaher Corporation How far can DBS travel? Is there a limit to the range of businesses in which Danaher can create value? The Danaher Business System (DBS) is a sophisticated and comprehensive strategy tool to create value that combines the advantages of an investment vehicle with excellent corporate portfolio management and strategy implementation. The DBS has had such a great success, delivering exceptional shareholder returns of 25% , that it seems unbeatable.…

    • 769 Words
    • 4 Pages
    Improved Essays
  • Superior Essays

    Davita Case Study

    • 1176 Words
    • 5 Pages

    Proven track record for turnaround. 4. Company reputation of being the most admired company. 5. Company has become financially strong with revenues of $ 7.53 billion and net income of $ 641 million.…

    • 1176 Words
    • 5 Pages
    Superior Essays
  • Improved Essays

    The long term goal for Seagram is to refocus and create values to reflect the company in a bright but effective way. The in depth understanding is there and active, but it’s a concern to the company to re-evaluate each step in moving forward. Seagram beverage company succumb to challenges and it is important to each individual to implement the right change. “ The new processes required numerous changes in how people behaved and interacted with each other-indeed, a new culture” (Jick & Peiperl, 2011, p.257). A new culture is the goal and change is needed to help individuals to reach each milestone, moving forward towards the future.…

    • 890 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    Analysis: Warren E. Buffett, the chairperson and the CEO of Berkshire Hathaway Inc., announced that MidAmerican Energy Holdings Company, a subsidiary of Berkshire Hathaway, would acquire the electric utility PacifiCorp. He considers this as his largest deal since 1998 and the second largest in his entire career. The acquisition of PacifiCorp renewed public interest in Berkshire Hathaway’s shares and on the day of the announcement the market value of equity had a $2.55 billion gain. Buffett’s investments are based on the intrinsic value of a company, he says, “intrinsic value is all important and is the only logical way to evaluate the relative attractiveness of investments and businesses” and he also says maximizing Berkshire’s average annual rate of gain in intrinsic business on a per-share basis is their long-term economic goal which gives the investors the belief that the acquisition will be very beneficial to the company.…

    • 1048 Words
    • 5 Pages
    Great Essays
  • Brilliant Essays

    Its headquarters and manufacturing facilities are located in Chicago, Illinois. ChemInc specializes in manufacturing medical compounds. Given the nature of these medical compounds, many require special storage until they are used in formulating drugs and/or medications by a pharmaceutical company. The special storage requirements include strict regulation of the temperature, air pressure, and humidity. ChemInc stores the medical compounds it manufactures in the appropriate storage facilities until they are purchased by and shipped to a customer.…

    • 1851 Words
    • 8 Pages
    Brilliant Essays
  • Great Essays

    - Aventis took the opportunity to criticize Sanofi’s timing of the proposed acquisition, which was just before the release of very promising forecasts of growth and battle about plavix patent - the goal of the takeover was create a strong company, reorganizing it in such a way to reduce costs and to remove overlaps as sanofi CEO said - Unions from both companies were concerned about the detrimental impact on employment that this merger could have. From the unions’ point of view, the employees were the major losers in deals such the Sanofi takeover, and they called for protest…

    • 1499 Words
    • 6 Pages
    Great Essays
  • Improved Essays

    COMPANY PROFILE Procter &Gamble Co. (PG) Brief Background The Procter & Gamble Company, incorporated on May 5, 1905, is focused on providing branded consumer packaged goods to consumers around the world. The company is located at1 Procter and Gamble Plaza, Cincinnati, Ohio. The company is founded by founded in 1837 by British American William Procter and Irish American James Gamble.…

    • 724 Words
    • 3 Pages
    Improved Essays