Quantcast

Berkshire Hathaway to Acquire 8.7% Stake in Axalta Coating - Analyst Blog


Shutterstock photo

Warren Buffett, the chairman and CEO of conglomerate, Berkshire Hathaway Inc. BRK.B is planning to buy an equity stake in Axalta Coating Systems.

Buffett will buy $560 million worth shares in Axalta from private equity investor Carlyle Group. In 2013, Carlyle Group had bought the business from DuPont Co. for $4.9 billion.  

Axalta provides a range of performance and transportation coatings, and is the world's biggest supplier of coatings to auto-repair shops and the second-largest provider to manufacturers of cars and light trucks. Berkshire, already owns paint company Benjamin Moore & Co.

This investment perfectly fits Buffett's increasing interest in automotive industry. Last month, Berkshire Hathaway opened its automotive business by acquiring Van Tuyl. At that time, Buffett had expressed his desire to scale up his investments in the automotive as the industry has bright growth prospects courtesy of an improving economic and employment scenario along with consistent gross U.S. product growth. After staying away from the industry for long, he said that he has only embarked on a journey that might have no end.

This investment will comprise 8.7% of equity in Axalta and will make Berkshire Hathaway its largest shareholder after Carlyle. But given Buffett's desire to bolster his automotive investments, it would not come as a surprise if he acquires the entire company. If Buffett does so, Axalta will be a good bolt-on acquisition to enhance the earnings of its existing business.  

Berkshire Hathaway sports a Zacks Rank #1 (Strong Buy). Other players with the same Zacks Rank include Allied World Assurance Company Holdings, AG AWH , Endurance Specialty Holdings Ltd. ENH and Arch Capital Group Ltd. ACGL and are also worth considering.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BERKSHIRE HTH-B (BRK.B): Free Stock Analysis Report

ENDURANCE SPLTY (ENH): Get Free Report

ARCH CAP GP LTD (ACGL): Get Free Report

ALLIED WORLD AS (AWH): Get Free Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Business , Stocks
Referenced Symbols: ACGL ,




More from Zacks.com

Subscribe






Zacks.com
Contributor:

Zacks.com

Equity Research












Research Brokers before you trade

Want to trade FX?