Hexion, Huntsman epoxy units for sale - banker

13 May 2008 22:22  [Source: ICIS news]

By Joseph Chang

NEW YORK (ICIS news)--Hexion Specialty Chemicals and Huntsman have put certain epoxy resin businesses up for sale to pass anti-monopoly scrutiny and facilitate their announced merger, an investment banker said on Tuesday.

“Hexion and Huntsman are selling some commodity epoxy resin businesses, and there is a high likelihood this will get done since there are logical strategic and financial buyers for these properties,” said a banker familiar with the deal. “Some are looking at them as a whole, and others are looking to buy pieces.”

Hexion and Huntsman, both US-based companies with global operations, are working with the US Federal Trade Commission and the European Commission to obtain the required approvals.

The businesses on the block have sales in the hundreds of millions of dollars, said the banker.

“Hexion and Huntsman anticipate they will be forced to sell assets by the regulatory bodies, so they are already taking this pre-emptive step,” the banker said.

According to a report by BB&T Capital Markets analyst Frank Mitch, the website dealReporter, which specialises in coverage of mergers and acquisitions, said Hexion and Huntsman “have started an auction process for various epoxy businesses that need to be divested in order for the transaction to close”.

“If a firm commitment is in place as of July 4, our understanding is that the regulating authorities would allow the transaction to close,” said Mitsch in the report.

Huntsman and Hexion would not comment on the reports.

Earlier on Tuesday, the European Commission revealed on its website that Hexion filed Form CO with the European Commission on 8 May, relating to the proposed merger with Huntsman.

Form CO provides information on any “concentration,” or combination of businesses with a “community dimension,” which falls within certain annual sales criteria.

On 7 April, Hexion exercised its right to extend the time it has to complete the deal, by 90 days, until 4 July.

Under the terms of the merger agreement, the $28 (€17.92)/share price for Huntsman started rising at the rate of 8%/year beginning on 5 April, minus any dividends declared or paid on or after 5 April.

Hexion announced its planned acquisition of Huntsman for $10.6bn, including the assumption of about $4bn in debt, back on 12 July 2007.

Hexion’s epoxy and phenolic resins segment posted $2.4bn in sales in 2007, while Huntsman’s materials and effects segment, which includes epoxy resins, also had $2.4bn in sales.

Shares of Huntsman rose 56 cents, or 2.5%, to close at $23.46 on Tuesday.

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($1 = €0.64)

By: Joseph Chang
+1 713 525 2653

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