Another major resin maker is getting out of the business.
Huntsman Corp. agreed to be bought by Basell Holding BV for $9.6 billion - $5.9 billion in cash and $3.7 billion in assumed debt. The two firms announced the deal June 26, little more than a month after GE Plastics confirmed it will be purchased by Saudi Basic Industries Corp.
Huntsman's biggest polymer stake is in polyurethanes, a new business for Basell. Hoofddorp, Netherlands-based Basell is a world leader in polyolefins production, catalysts and technology licensing.
Huntsman's commodity plastics business, including polypropylene, expandable polystyrene and polyethylene, is not included in the Basell deal. Flint Hills Resources LLC earlier agreed to buy those product lines. Huntsman spokesman Russ Stolle said the transaction with Wichita, Kan.-based Flint Hills is on schedule to close in the third quarter of this year. Huntsman expects to finalize the Basell deal in the fourth quarter.
The Basell deal will end a 37-year run for Huntsman, which started as a plastic packaging company that grew through acquisition to include commodity and specialty polymers, commodity and specialty chemicals, and pigments. After the sale, the Huntsman family plans to focus on charity work, especially helping find cures for cancer.
One analyst compared Basell's owner, Access Industries Inc. of New York, to Huntsman in its days as a business buyer. Access bought Basell for $6 billion in 2005 and, two years later, is leading the charge to buy Huntsman. It recently bought an option to own a chunk of polyolefins producer Lyondell Chemical Co. Access also was one of the recent bidders for GE Plastics.
Access Industries is headed by Russian billionaire Len Blavatnik.
``The deal is good for Access,'' said Balaji Singh, president of Chemical Market Resources Inc. of Houston, in a telephone interview. ``It broadens their product line.
``Access ran Basell very well the past few years.''
A small but symbolic part of the deal, Singh pointed out, is that it will give Access and Basell a ready-made office among major U.S. plastics and chemical players when it occupies Huntsman's administration headquarters in The Woodlands, Texas, a Houston suburb. Basell's U.S. sales office now is in Elkton, Md. Huntsman's corporate headquarters is in Salt Lake City.
In addition to a range of methylene diphenyl diisocyanate-based PU technologies, including thermoplastic PU, Basell will get a big stake in maleic anhydride, used mainly to make unsaturated polyester resins, formulated polymer systems such as epoxies for a range of industrial uses, titanium dioxide pigment production and an array of solvents, coatings and specialty chemicals.
Basell is the largest PP supplier in North America, with plants in Bayport, Texas; Lake Charles, La.; Sarnia, Ontario; and Varennes, Quebec. It also sources PP from a ConocoPhillips plant in Linden, N.J., and Basell's Indelpro SA de CV joint venture plant in Tampico, Mexico. Basell will close its outmoded Sarnia plant in mid-2008 while it restarts a third line at Bayport. As well, Indelpro is building another plant, in Altam¡ra, Mexico, that should begin operating early in 2008. In total, Basell now can access about 4 billion pounds of PP annually in North America.
Basell is the world's largest PP producer, with 18 billion pounds of annual capacity. It is the leader in Europe and ranks No. 7 among global PE producers, with 5 billion pounds per year of capacity. It offers an impressive range of catalysts for polyolefin production and it licenses PP and PE polymerization technologies.
``Basell's industry-leading polyolefins businesses and Huntsman's businesses will benefit from the expertise both companies have demonstrated in technology, innovation and customer service,'' Basell Chief Executive Officer Volker Trautz said in a news release.
A combined Basell/Huntsman entity will have operations on all continents and will be positioned for fast-growing markets in China, India, Eastern Europe and Latin America. The firms had combined sales of more than $26 billion last year, evenly split between them, and some 20,900 employees.
``This transaction enhances our position as a global industrial group with long-term strategic assets in the chemicals industry,'' said Blavatnik, Access Industries Chairman and founder.
``Complementary is the key word,'' added Basell spokeswoman Patricia Vangheluwe in a telephone interview.
Huntsman's agreed-on price of $25.25 per share is a 34 percent premium over the firm's trading price the day prior to the sale announcement. The Huntsman family and investment firm MatlinPatterson, which own 57 percent of Huntsman's common stock, agreed to approve the transaction. MatlinPatterson bought some Huntsman debt five years ago when Huntsman was close to bankruptcy and then converted its investment into a controlling stake.
Huntsman founder Jon Huntsman and his wife, Karen, have begun transferring hundreds of millions of dollars' worth of their company shares to charities, according to a Salt Lake Tribune report.
Huntsman's agreed-to commodity polymers buyer, Flint Hills Resources, is a subsidiary of Koch Industries Inc. of Witchita. Last September, Huntsman sold its petrochemical business in Europe to Saudi Basic Industries. Last year it also unloaded its tertiary butyl ether business.