Axiall Corp (AXLL) Call Buyers to Make $1.6 Million Profit in 3 Weeks

(Here are all notes we sent to clients on AXLL since May 18, those call buyers from May 18 are set to make $1.6 million in profits)

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June 7, 2016

Lotte Chemical makes an solicited offer to acquire AXLL for $1.6 billion, higher than WLK offer ahead of shareholder vote on June 17. This makes things interesting because now WLK must make even higher offer if it wants in otherwise the shareholder vote is obviously No. Those unusual call buyers recorded on May 18 were on to something.

May 23, 2016

On Wednesday last week we discussed deep in the money June 17.5 and 22.5 call buyers as recorded in Tracker with detail notes. This morning Reuters is reporting Westlake Chemical intends to revise or reaffirm proposal to Axiall.

May 18, 2016

A specialty chemical stock with good size unusual call action building:

– Buyer of 940 June 17.5 calls for $5.60 near offer
– Buyer of 740 June 22.5 calls for $1.60 offer

Approx $644,000 call premium bought on 8x daily average call volume. Westlake Chemical in early April made $23.12/share cash and stock offer to acquire AXLL which was immediately rejected by AXLL board as too low. Now a shareholder vote is scheduled on June 17 at Annual Meeting. AXLL makes the case that Westlake due diligence used only $60 million synergies to be realized from the acquisition while they believe it would be $270 million, more than 3x the estimate, hence offer too low. On May 9 the company also stated that its opening discussions with other suitors. Lastly, Bloomberg ran a piece on April 5 about top shareholder Shapiro Capital Management also opposes Westlake offer.

So, it is pretty clear the vote will be against the sale on June 17 that may prompt higher bid from WLK or bring in other suitors. More on this here from Bloomberg.