UpdateHuntsman acquisition sparks debt review

26 June 2007 23:14  [Source: ICIS news]

(Adds updates throughout)

HOUSTON (ICIS news)--Ratings agencies were reviewing Basell's debt for possible downgrade on Tuesday following the company's announcement of its intent to acquire Huntsman.

Basell said it will buy Huntsman for $9.6bn (€7.1bn) or $25.25/share.

Moody's Investors Service said on Tuesday that Basell will likely fund most of the purchase through debt. As a result, the service was reviewing Basell's debt for possible downgrade.

Moody's also said it is reviewing Huntsman's debt for a possible downgrade for similar reasons.

Likewise, Fitch Ratings said that it placed Basell's debt on rating watch negative. Fitch said it should end the watch after the deal closes and the ratings company reviews Basell's financing plan.

The timing of Basell's offer came as a surprise, Citigroup Investment Research analyst PJ Juvekar said in a statement.

Huntsman recently rebuffed an earlier offer by a private equity company, Juvekar said. Also, Huntsman chief executive Peter Huntsman had made comments as late as last week about acquiring Swiss specialty companies.

Juvekar said he did not expect any other companies to bid on Huntsman. Juvekar maintained Citigroup's hold rating on the company.

Huntsman shares increased by 28% on Tuesday to close at $24.21 on the New York Stock Exchange.

Stock in a previously suspected acquisition target, Lyondell, fell nearly 5% to close at $35.76 on the New York Stock Exchange.

Some analysts said that Lyondell could have been an acquisition target of Leonard Blavatnik, the founder of Basell's corporate parent, Access Industries.

Blavatnik already owned an 8.3% stake in Lyondell, which was regarded as a possible first step to an outright acquisition.

Such a possibility faded after Huntsman became the acquisition target of Basell.

Earlier this year, Lyondell had became the talk of an acquisition by Leonard Blavatnik, the founder of Basell's corporate parent.

Blavatnik acquired an 8.3% stake in Lyondell, and analysts had said the stake could have been the first step in an outright acquisition of the company.

($1 = €0.74)

By: Al Greenwood
+1 713 525 2645

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