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Huntsman (HUN) Wraps Up Remaining 50% Stake Buy From Sasol

Zacks Equity Research

Huntsman Corporation HUN has completed its earlier announced purchase of the balance 50% interest in the Sasol-Huntsman maleic anhydride joint venture from Sasol.

Huntsman now fully controls the entity that owns a manufacturing plant in Germany with capacity to make 230 million pounds of maleic anhydride annually. The company paid roughly $100 million to Sasol including acquired cash net of any debt subject to customary post-closing adjustments.

Huntsman, which belongs to the chemical-diversified industry along with Eastman Chemical Company EMN, Air Products and Chemicals, Inc APD and Celanese Corporation CE, noted that the completion of the stake purchase allows it to fully integrate its European business into its global footprint, enabling it to better service its customer base in key markets such as construction and coatings. It is also in sync with the company’s strategy of expanding its portfolio of businesses with higher and more stable margins and strong free cash flow.
Huntsman, in August, also entered into a definitive agreement with Indorama Ventures to divest its chemical intermediates businesses, including PO/MTBE, and its surfactants businesses.

The transaction is valued at $2.076 billion, which comprises a cash purchase price of $2 billion along with the transfer of up to roughly $76 million in net underfunded pension as well as other post-employment benefit liabilities. The deal is expected to close near the end of 2019, subject to regulatory approvals and other customary closing conditions.

Per the deal terms, Indorama Ventures will buy Huntsman's Texas-based manufacturing facilities located in Port Neches, Dayton and Chocolate Bayou. It will also acquire the Ankleshwar, India and Botany, Australia facilities.

Per Huntsman, the transaction transforms its balance sheet and accelerates its ability to expand in downstream areas. The deal is another milestone in terms of its strategy to focus on downstream and specialty businesses. The company believes that the deal will enable it to generate more stable and consistent margins as well as strong free cash flow.  

Huntsman also stated that it intends to accelerate share repurchases under its existing $1-billion multi-year authorization following the transaction closure.

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