Former DuPont automotive finishes business, Axalta Coating Systems Ltd. announced that an affiliate of Berkshire Hathaway Inc. has entered into a stock purchase agreement with certain affiliates of The Carlyle Group.
Berkshire, the company headed by Omaha investor Warren Buffett, agreed to buy 20 million of Axalta’s common shares, valued at $560 million, or $28 a share.
The sale amounts to less than 9 percent of outstanding shares of the publicly traded company. Carlyle remains the largest shareholder.
Axalta, following the sale, moved its headquarters to Philadelphia and other offices to Delaware County, Pa. The company retains a research presence in northern Delaware.
Carlyle purchased the business from DuPont for nearly $5 billion.
Activist shareholder Nelson Peltz and his Trian Fund Management, has claimed that DuPont did not get enough for Axalta, based on the price of Axala stock.
Peltz and Trian launched a proxy battle by seeking four seats on the company’s board. DuPont this week urged shareholders to not vote for the Trian slate, which includes Peltz.
Peltz has taken credit for the recent increase in DuPont’s stock price. The company will spin off its Performance Chemicals business to a company known as Chemours.
Trian and Peltz are seeking further spin-offs. DuPont and CEO Ellen Kullman have claimed the strategy is risky and would weaken the company’s strong financial structure.
Axalta will not receive proceeds from the sale of the shares. In connection with the purchase, Berkshire Hathaway agreed that it would not dispose of the shares for 90 days following the completion of the sale. Axalta has agreed to provide Berkshire Hathaway with certain registration rights following the expiration of that 90-day period.
“We are pleased to have Berkshire Hathaway Inc. take this share ownership position in Axalta,” said Charlie Shaver, CEO of the company. “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.”
The stock sale by Axalta may increase speculation about Berkshire buying into DuPont, which has a stock market value of about $65 billion.
Buffett is known for buying into blue chip companies that over the years have included Coca Cola, Geico and the Burlington Northern Santa Fe Railroad.
In a move similar to his DuPont foray, Peltz purchased Heinz shares and demanded changes, with Berkshire eventually partnering with an investment firm to buy the company.
Heinz is now buying another food behemoth, Kraft, which has operations in Dover.
Heinz has undergone major cost cutting efforts under the controlling shareholders.
