Bain Capital Inc. has acquired a minority stake in privately held Huntsman Corp. for $600 million, marking only the fourth time Huntsman has worked with an outside investor in its 31-year history.
Huntsman of Salt Lake City will use part of the investment from Boston-based Bain to buy out Imperial Chemical Industries plc's 30 percent share of Huntsman International Holdings LLC, a Huntsman subsidiary.
The remainder of the investment will be used to continue Huntsman's "aggressive growth strategy," which has enabled the company to average 30 percent annual growth over the last 15 years, according to Huntsman spokesman Don Olsen.
Bain holds investments in more than 200 companies in industries ranging from information technology to healthcare to manufacturing. The 13-year-old firm currently manages more than $8 billion in assets.
Huntsman founder and Chairman Jon Huntsman said in a Feb. 23 news release that his firm and Bain "see significant potential for consolidation and rationalization in the global chemical industry."
Huntsman officials offered no details as to where their next investment would be or how it might impact the firm's plastics business, which accounted for at least one-third of Huntsman's 2000 sales total of $8.5 billion.
Globally, Huntsman produces about 1.2 billion pounds of polypropylene, 450 million pounds of low density polyethylene, 250 million pounds of linear LDPE, 340 million pounds of expanded polystyrene and 110 million pounds of specialty PP and thermoplastic polyolefins each year.
The firm's polyurethanes business also produces 1.5 billion pounds of methylene diphenyl diisocyanate feedstocks, 100 million pounds of toluene diisocyanate feedstocks, 500 million pounds of PU systems and 300 million pounds of polyols.
Huntsman greatly reduced its plastics presence in 1998 when it sold its massive PS/styrenics business to Nova Chemicals Corp. It has also sold off most of Huntsman Packaging Corp., a major plastic film maker.
Huntsman's most recent plastics purchase was its July 2000 acquisition of the thermoplastic polyurethanes business of Rohm and Haas Co. for $120 million. Its biggest single move was the 1999 purchase of four basic chemicals businesses — including 2 billion pounds of PU capacity — from ICI for $2.8 billion.
Most of Huntsman's recent buys have been in less cyclical areas of the specialty chemicals market. The company currently has deals pending to acquire the ethyleneamines business of Dow Chemical Co. and the European surfactants business of Albright & Wilson.
Bain's investment, which includes representation on Huntsman's board of directors, will not change Huntsman's day-to-day operations and is not a sign that the firm is looking for additional financial partners, Olsen said.
"Bain is an equity investor that doesn't get involved in operating the companies it invests in," Olsen said. "[Huntsman and Bain] were aware of each other for some time, but there was no third party involved in bringing us together, and we're not actively looking for more partners."
Bain officials could not be reached for comment.
In a July Plastics News interview, Huntsman Chief Executive Officer Peter Huntsman, who assumed day-to-day control of the company last year, said his firm wasn't "looking to get out of plastics" and was reviewing two or three potential PE acquisitions.
Olsen added that Huntsman "is going to continue to run these [plastics] businesses as best we can."
Although Huntsman is enthusiastic about the recent price increase won by PE makers, Olsen said the PP market "continues to shoot itself in the foot by adding product."
Bain now joins Consolidated Press Holdings Ltd. of Sydney, Australia, as the only outside investors in Huntsman. Consolidated owns 20 percent of the Texaco Chemical Co. plants that Huntsman bought for $860 million in 1994.
Great Lakes Chemical Co. previously held a minority stake in Huntsman, but Huntsman repurchased that stake before selling its styrenics business to Nova in 1998.