Shares of Axalta Coating Systems Ltd (NYSE:AXTA) plunged as much as 22% in trading Thursday after rejecting a buyout offer from Nippon Paint. Shares were down 16.2% at 3:05 p.m. EST Thursday and showed no signs of recovery late in the day.
According to Reuters, the latest offer from Nippon Paint was for $37 per share in cash, a price Axalta's management didn't think was enough to complete a buyout. The bid would have valued the company at $9.1 billion.
Axalta has now rejected offers from Nippon and Akzo Nobel over the terms the company offered. Management is clearly confident they can create more value as an independent company, but that's not playing out on the market Thursday.
Given Wednesday's closing price of $37.55 per share, the market was obviously expecting a buyout at a higher price than the $37 that was reportedly on the table. The move was a reversal of Axalta's pop earlier this fall when buyout talks began. This shows why it can be dangerous buying a stock on buyout speculation, especially in a company that seem to be making a habit of fighting off potential mergers.