By: Frank Esposito
September 17, 2013
Huntsman Corp, is acquiring five businesses – including titanium dioxide, color pigments and plastic compounding – from Rockwood Holdings Inc. in a deal valued at $1.325 billion.
That total includes $1.1 billion in cash and $225 million in unfunded pension liabilities, officials with The Woodlands, Texas-based Huntsman said in a Sept. 17 news release.
The acquisition “provides a unique opportunity to unlock value within our pigments business, and builds on the strong improvements we have made to its competitiveness,” president and chief executive officer Peter Huntsman said in the release.
Princeton, N.J.-based Rockwood had defined the five businesses as “non-strategic,” officials said in a Sept. 17 news release. Earlier this year, the firm had sold off its advanced ceramics and clay-based additives units in deals valued at more than $2 billion total.
“With the sale of these businesses, we have successfully completed…all of our key objectives for 2013,” chairman and CEO Seifi Ghasemi said in the release.
Huntsman officials added that the deal should create $130 million in annual cost savings by the end of 2015. The firm already is a leader in titanium dioxide, a widely used whitening pigment. It now acquires Rockwood’s Sachtleben-brand TIO2 business, which sells into plastics, paints, inks and similar markets.
The color pigments business that Huntsman is buying sells into plastics, paints and similar markets in powder, granular and liquid grades. The thermoplastic and rubber compounding unit included in the deal operates under the Gomet-brand name and sells primarily into the European automotive market. Its compounds are based on plastics, rubber and polyurethane.
The other two businesses being acquired by Huntsman – timber treatment chemicals and water chemistry – aren’t involved with the plastics market.
TIO2 was Rockwood’s largest business unit in 2012, with sales of almost $900 million, representing about 25 percent of total company sales. That sales total was down more than four percent vs. 2011, while the unit’s 2012 pretax profit of $165 million was down 36 percent in the same comparison. Separate sales totals for other businesses being acquired by Huntsman weren’t available.
Huntsman ranks as a major producer of TIO2, PU and other specialty materials. The firm employs 12,000 worldwide and has annual sales of more than $11 billion.
The purchase will make Huntsman the world's second largest TIO2 producer with a 16 percent market share, trailing only DuPont Co. at 20 percent. Huntsman had competed against Rockwood in the TIO2 market, a company spokesman said.
The businesses being acquired had total sales of $1.5 billion in the year ended June 30. Almost $1 billion of that amount came from TIO2, with $330 million coming from pigments, $135 million from timber chemicals, $30 million from water chemicals and $15 million from compounding. The businesses employ 3,300 worldwide and operate 20 plants - 10 in Europe, eight in North America and two in Asia.
The acquisition is Huntsman's largest since the firm paid $2.8 billion to buy four businesses from British chemicals maker ICI plc in 1999.