Building Materials Stocks Q3 Teardown: Armstrong World (NYSE:AWI) Vs The Rest

Investing.com – U.S. stocks were higher after the close on Friday, as gains in the Healthcare, Basic Materials and Consumer Services sectors led shares higher.

At the close in NYSE, the Dow Jones Industrial Average gained 1.08%, while the S&P 500 index climbed 0.98%, and the NASDAQ Composite index climbed 0.88%.

The best performers of the session on the Dow Jones Industrial Average were Home Depot Inc (NYSE:HD), which rose 3.29% or 10.94 points to trade at 343.32 at the close. Meanwhile, Merck & Company Inc (NYSE:MRK) added 2.94% or 2.79 points to end at 97.76 and Sherwin-Williams Co (NYSE:SHW) was up 2.76% or 9.05 points to 337.06 in late trade.

The worst performers of the session were Walmart Inc (NYSE:WMT), which fell 1.66% or 1.78 points to trade at 105.33 at the close. Microsoft Corporation (NASDAQ:MSFT) declined 1.29% or 6.19 points to end at 472.24 and NVIDIA Corporation (NASDAQ:NVDA) was down 0.96% or 1.73 points to 178.91.

The top performers on the S&P 500 were Ross Stores Inc (NASDAQ:ROST) which rose 8.41% to 174.00, Align Technology Inc (NASDAQ:ALGN) which was up 7.34% to settle at 142.56 and Builders FirstSource Inc (NYSE:BLDR) which gained 7.14% to close at 101.62.

The worst performers were Oracle Corporation (NYSE:ORCL) which was down 5.66% to 198.76 in late trade, Vistra Energy Corp (NYSE:VST) which lost 2.99% to settle at 168.59 and Constellation Energy Corp (NASDAQ:CEG) which was down 2.30% to 337.83 at the close.

The top performers on the NASDAQ Composite were JX Luxventure Ltd (NASDAQ:JXG) which rose 1,319.75% to 3.45, Foxx Development Holdings Inc (NASDAQ:FOXX) which was up 77.00% to settle at 3.54 and Mobilehealth Network Solutions (NASDAQ:MNDR) which gained 56.58% to close at 4.76.

The worst performers were Heartbeam Inc (NASDAQ:BEAT) which was down 53.51% to 0.78 in late trade, Creative Media & Community Trust Corporation (NASDAQ:CMCT) which lost 41.86% to settle at 4.00 and FAT Brands Inc (NASDAQ:FAT) which was down 40.01% to 0.45 at the close.

Rising stocks outnumbered declining ones on the New York Stock Exchange by 2191 to 584 and 58 ended unchanged; on the Nasdaq Stock Exchange, 2509 rose and 873 declined, while 150 ended unchanged.

Shares in Ross Stores Inc (NASDAQ:ROST) rose to all time highs; gaining 8.41% or 13.50 to 174.00. Shares in JX Luxventure Ltd (NASDAQ:JXG) rose to all time lows; gaining 1,319.75% or 3.21 to 3.45. Shares in Heartbeam Inc (NASDAQ:BEAT) fell to all time lows; losing 53.51% or 0.90 to 0.78. Shares in Creative Media & Community Trust Corporation (NASDAQ:CMCT) fell to all time lows; losing 41.86% or 2.88 to 4.00. Shares in FAT Brands Inc (NASDAQ:FAT) fell to all time lows; losing 40.01% or 0.30 to 0.45.

The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 11.17% to 23.47.

Gold Futures for December delivery was up 0.03% or 1.05 to $4,061.05 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in January fell 1.75% or 1.03 to hit $57.97 a barrel, while the January Brent oil contract fell 1.44% or 0.91 to trade at $62.47 a barrel.

EUR/USD was unchanged 0.10% to 1.15, while USD/JPY fell 0.66% to 156.46.

The US Dollar Index Futures was down 0.01% at 100.08.

Investing.com -- The proposed $25 billion merger between Akzo Nobel NV (AS:AKZO) and Axalta Coating Systems Ltd (NYSE:AXTA) is facing rising shareholder scrutiny, with two major Axalta investors, Artisan Partners and Shapiro Capital Management, now publicly opposing the all-stock deal that would form a global coatings giant with roughly $17 billion in annual revenue.

Artisan Partners, an estimated 0.7% holder of Axalta stock,  issued the first major challenge earlier this week, questioning the valuation, governance structure, and whether Axalta is receiving fair consideration in what AkzoNobel characterizes as a no-premium, merger-of-equals transaction.

Shapiro Capital followed, saying it is “very disappointed” with the agreement. In an interview with The Wall Street Journal, President Louis Shapiro argued that Axalta investors “should get the premium they deserve,” adding that the firm, a top-25 Axalta shareholder with a 1.1% stake, will vote against the merger unless terms are improved or alternatives are explored.

The two stand in contrast with Cevian Capital, which has thrown its support behind the proposed combination, saying the deal reflects the “significant value potential” tied to consolidation in the coatings and paint industry, according to reporting from Bloomberg. The activist investor previously built up a roughly 5% stake in Akzo Nobel.

Deal Structure and Terms Under Fire
Under the current terms, Axalta shareholders would receive 0.6539 AkzoNobel shares for each Axalta share, leaving them with 45% of the combined company. AkzoNobel shareholders would hold 55% and receive a €2.5 billion special dividend prior to closing.

AkzoNobel CEO Greg Poux-Guillaume noted on the analyst call that the agreement was intentionally designed as a no-premium, MOE structure, an approach increasingly at odds with shareholders seeking a control premium.

Companies Defend the Merger to Investing.com
In response to shareholder pushback, both companies defended the transaction in statements to Investing.com.

AkzoNobel said the merger “will create a leader in paints and coatings with a highly attractive financial profile, industry-leading innovation and unparalleled global reach,” adding that the deal is “rooted in clear strategic and financial logic” and will create significant value for both sets of shareholders.

Axalta emphasized the synergy opportunity, saying: “We are confident that our pending merger with AkzoNobel represents the best alternative to drive substantial long-term growth and value creation for Axalta shareholders through approximately $600 million of actionable run-rate synergies.” The company added, "We look forward to continuing to engage with our shareholders.”

What Management Highlighted on the Call
On the post-announcement call, executives outlined:

• ~$600 million in actionable run-rate cost synergies, with 90% expected within three years

• A global footprint of 173 manufacturing sites and 91 R&D centers

• A combined workforce of 4,200 scientists and engineers and ~100 brands across industrial, refinish, mobility, aerospace, marine, powder, and decorative markets

• Expected $3.3 billion in adjusted EBITDA, 20% EBITDA margins, and $1.5 billion in adjusted free cash flow

• A closing timeline that could extend into late 2026 or early 2027

Management argued the combination offers scale and innovation neither company could achieve independently, as the two seek to compete with coating industry leaders PPG Industries Inc (NYSE:PPG) and Sherwin-Williams Co (NYSE:SHW).

Growing Resistance Ahead of a Pivotal Vote
With both Artisan and Shapiro now opposed, Axalta’s board is navigating increasing pressure from shareholders who argue the company is being undervalued, and who may push for renegotiated terms or a broader sale process. The vote, expected next year, is shaping into a major test of whether the companies can secure investor buy-in for one of the coatings industry’s largest-ever mergers.