Jon Huntsman is out bargain-shopping again, this time paying $2.8 billion so his Salt Lake City-based Huntsman Corp. can acquire four basic chemicals businesses from Imperial Chemical Industries plc of London.
The move, announced April 15, includes almost 2 billion pounds of polyurethane capacity and 4.5 billion pounds of plastics feedstocks including ethylene, paraxylene and other aromatic chemicals.
In the deal, Huntsman will acquire ICI plants employing 7,000 in 15 countries in North America, Europe and Asia. Huntsman's annual sales will jump from $4 billion to $7.5 billion.
The largest plastics feedstock holding in the mix is an 80 percent share in the output of a 1.9 billion-pound-per-year ethylene cracker in Wilton, England. The aromatics include paraxylene, a key ingredient in PET production. Huntsman also will acquire 1.3 billion pounds of capacity for titanium dioxide, a common plastics additive.
The PU business ranks fourth globally, trailing only Bayer AG, BASF AG and Dow Chemical Co.
The ICI assets, along with Huntsman's existing propylene oxide business, will be owned for three years by Huntsman ICI Holdings, a holding group of which Huntsman will own 70 percent. Plans call for Huntsman to buy the remaining 30 percent of the business from ICI at the end of that three-year period.
When the deal is completed, ICI will have sold off $8.4 billion in chemical assets.
For Huntsman, a historically successful bottom-cycle buyer, the ICI buy is its largest since it bought Rexene Corp. for $600 million in June 1997. Huntsman surprised many industry observers when it sold its polystyrene and other styrenics businesses to Nova Corp. last year for $920 million.
In late 1997, Chairman and Chief Executive Officer Jon Huntsman said he planned to lessen his firm's commodity exposure and move more into specialty chemicals. The PU and titanium dioxide assets seem to fit that pattern, while ethylene and aromatics seem to fall outside of it, unless Huntsman planned to make downstream acquisitions in polyethylene or PET.
``Polyurethanes and titanium dioxide are higher margin businesses, but ICI may not have done the deal without including ethylene and aromatics,'' said Howard Blum, a consultant with Catalyst Group in Spring House, Pa.
