Huntsman Corp. could sell as much as $1.5 billion of its commodity chemicals operations in the next two years as it moves further into the specialty chemicals arena, company officials said.
The financial transformation could affect the Salt Lake City-based company's polypropylene, polystyrene, ethylene, styrene, propylene and butadiene works. The planned move could represent more than a quarter of the firm's assets.
``We're looking at our businesses and seeing which ones give us the best return on our assets,'' spokesman Don Olsen said in an Aug. 28 telephone interview from Salt Lake City. ``But for us it stands out more because we've done nothing but acquire.''
The review process will last six months to two years.
``We might not sell anything,'' Olsen said. ``It depends if there's a buyer out there who will give us what we want.''
The move will allow Huntsman to avoid the peaks and valleys of the commodities business. The potential sales could cut Huntsman's short-term revenue by 20-30 percent, but that lost revenue should be regained within two years, officials said.
``We want to focus on materials that are less cyclical than commodities materials,'' Olsen said.
Huntsman Chief Executive Officer Jon Huntsman told the Wall Street Journal on Aug. 27 the firm will choose which businesses it will sell in the next six months. Huntsman, who was in New York finalizing a deal to acquire Rexene Corp., was unavailable for comment.
Although the company has not identified any specific materials that might be sold off, Olsen said it is unlikely Huntsman will sell its ethylene and propylene holdings, which feed into its specialty chemicals operations.
Huntsman's big move into the specialty chemicals field came in 1994 when it purchased Texaco Chemical for $1.04 billion.
Since then, Huntsman has bought several specialty chemicals businesses, most noticeably Rexene. Huntsman acquired the Dallas-based plastics and chemicals firm for $600 million.
Huntsman told the Wall Street Journal he has not identified potential buyers, but he mentioned Dow Chemical Co. of Midland, Mich., and BASF Corp. of Mount Olive, N.J., as companies committed to remaining in the commodity chemicals business.
Officials at Dow and BASF declined to comment on their interest in parts of Huntsman.
Industry consultants said Huntsman's move fits the company's pattern of maximizing returns on its acquisitions.
``Huntsman recognizes the business cycles for commodity chemicals are going into the low end of the business cycle,'' said Rob Harvan, an analyst with Houston's Bonner & Moore consulting firm. ``It may be less expensive for them to buy on the open market ... rather than continue to operate plants.''
Balaji Singh of Houston's Chemical Market Resources Inc. labeled Huntsman's strategy ``a brilliant move'' and predicted the company's butadiene and styrene works will be sold.
``Selling the commodities will ... give Huntsman a bargaining position in raw materials,'' Singh said.