Huntsman Corp. will sell its chemical intermediates and surfactants businesses to Indorama Ventures for $2 billion in a move that will effectively see the Texas-based company exiting the ethylene business both in the U.S. and globally.
The deal, announced Aug. 7, covers Huntsman's intermediates business, including propylene oxide and methyl tert-butyl ether production (PO/MTBE). It covers three manufacturing sites in Texas — Port Neches, Dayton and Chocolate Bayou — Ankleshwar, India, and Botany, Australia.
The combined production capacity of the assets involved in the transaction amounts to around 3 million tons per year, according to Andrew Day, Wood Mackenzie research director.
Products such as ethylene, ethylene oxide and monoethylene glycol will strengthen a main part of Indorama's PET feedstock supply chain, boosting the Thailand-based chemical company's leading position as a PET manufacturer, Day said.
The acquisition also gives Indorama access to a number of new derivative products such as propylene/PO derivatives, surfactants, ethanolamines, glycol ethers and MTBE, he added.
The transaction includes the Port Neches steam cracker, which utilizes ethane and propane feedstock for ethylene and propylene production.
The divestment, according Patrick Kirby, Wood Mackenzie principal analyst, will see Huntsman exit the U.S. ethylene business and add a second U.S. steam cracker for Indorama.
"As this was Huntsman's remaining ethylene asset following several divestments, this sale effectively ends Huntsman's production footprint for ethylene in the U.S. and globally," Kirby added.
For Huntsman, based in The Woodlands, Texas, the transaction is a "milestone" in its strategy to focus on downstream and speciality businesses where the company generates more stable margins, explained Peter Huntsman, chairman, president and CEO.
Huntsman's stock climbed after the sale was announced, ending the day Aug. 8 at $21.37 per share, a 16.9 percent boost from the previous day.
Indorama recently restarted the Lake Charles steam cracker to provide full backward integration into ethylene for its existing EO/glycol production in the U.S. market.
The addition of the Port Neches asset will expand Indorama's ethylene capacity in the U.S. by around 50 percent according to Kirby.
The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close near the end of 2019.