Huntsman Buys ICI Businesses Including TiO2 and Urethanes

19 April 1999 00:00  [Source: ICB Americas]

By Alex Tullo

Huntsman Corporation is buying a major portion of the industrial chemicals assets that ICI PLC has been looking to divest since it announced its intention of buying Unilever's specialty chemicals business for $8 billion in May 1997. ICI will sell its global titanium dioxide, polyurethanes and selected petrochemical assets to Huntsman in a deal worth an estimated $2.73 billion.

Upon the expected close of the deal this summer, the acquired businesses, which generated $3.24 billion in sales in 1998, will raise Huntsman's annual revenues to about $7.5 billion.

"This acquisition nearly doubles the size of our existing company and significantly increases our overall global presence, particularly in Europe," says Huntsman chairman and CEO, Jon M. Huntsman.

The debt-free valuation of the poly-urethanes business is $1.78 billion, and the TiO2 assets are valued at $805 million. The petrochemical assets, which include aromatics operations, North Tees logistics and ICI's olefins supply business, are rated at $241 million.

ICI's polyurethanes capacity is 1.7 billion pounds and its polyurethane raw materials nameplate is roughly 1.2 billion pounds. The business includes operations in Wilton, UK; Rozenburg, the Netherlands; and Geismar, La. The TiO2 business has a nameplate of 1.3 billion pounds per year and assets in North America, Europe, Malaysia and South Africa. ICI will receive $2.09 billion from initial net disposals that will be used to pay down debt. "The transaction confirms our determination to focus our resources on the performance and growth of our high-quality specialty and paints business," says ICI chief executive Charles Miller Smith.

Huntsman Corporation has already made overtures for ICI's acrylics business, which ICI now plans to sell.

ICI has completed more than 40 disposals since it launched its divestment program in May 1997. These disposals will total $8.37 billion with the sale to Huntsman. Earlier this year, ICI was unable to sell its worldwide TiO2 business to E. I. du Pont de Nemours & Co. and NL Industries.

Huntsman is acquiring the ICI assets through its 70 percent stake in the newly formed company, Huntsman ICI Holdings (HICI). ICI will hold onto the other 30 percent, which coupled with a second tranche of HICI notes, has an estimated value of $483 million. ICI will keep this investment for at least three years. HICI will include Huntsman's propylene oxide business, which also manufactures propylene glycol, and MTBE.

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