A long chase pays off for West­lake

Houston Chronicle Sunday - - BUSINESS - By Jor­dan Blum

Maybe the long chase was worth it.

About a year after it closed its nearly $2.4 bil­lion ac­qui­si­tion of ri­val chem­i­cal maker Ax­i­all, West­lake Chem­i­cal Corp. of Hous­ton re­ported block­buster earn­ings in the third quar­ter. West­lake said it posted record profit and sales as the petro­chem­i­cal com­pany con­tin­ues to ex­pand.

The com­pany’s profit more than tripled to $211 mil­lion from $66 mil­lion in the third quar­ter of 2016. Sales jumped more than 60 per­cent, to $2.1 bil­lion from $1.3 bil­lion.

West­lake’s vinyls busi­ness was par­tic­u­larly strong, ac­count­ing for $1.6 bil­lion of sales. West­lake has performed well all year, see­ing its stock surge more than 50 per­cent since the be­gin­ning of Jan­uary to more than $90 a share at the end of last week.

West­lake chased Ax­i­all for four years, at­tempt­ing a hos­tile takeover un­til ul­ti­mately rais­ing its price and ne­go­ti­at­ing a deal, agree­ing to pay $2.3 bil­lion in cash and as­sume $1.5 bil­lion in Ax­i­all’s debt. The fi­nal of­fer — $33 per share — boosted West­lake’s ear­lier bid by about 40 per­cent.

The deal closed in late Au­gust 2016.

The com­bined West­lake rep­re­sents the world’s third-largest maker of both PVC, or polyvinyl chlo­ride, and chlor-al­kali, used to make chlo­rine and more. West­lake makes a va­ri­ety of plas­tics and vinyls, while Ax­i­all also made build­ing prod­ucts like sid­ing, deck­ing and win­dow frames.

“We be­lieve the ac­qui­si­tion and con­tin­ued in­vest­ments to im­prove the re­li­a­bil­ity and op­er­a­tional ef­fi­ciency of our as­sets will en­able us to be well po­si­tioned to fully lever­age the im­prov­ing vinyls mar­ket,” West­lake’s pres­i­dent and CEO Al­bert Chao said.

The chem­i­cal in­dus­try has un­der­gone a wave of merg­ers over the past year or so, in­clud­ing the com­bi­na­tion of Dow Chem­i­cal Co. and DuPont. jor­dan.blum@chron.com twit­ter.com/jd­blum23

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