US Huntsman's $415m bid for Tronox falls on low end - banker

11 November 2009 21:56  [Source: ICIS news]

Huntsman bid $415m for Tronox TiO2 plantsHOUSTON (ICIS news)--Huntsman's $415m (€278m) bid for most of the pigment plants of bankrupt producer Tronox falls on the low end of similar deals, according to a banker - a finding that drew no immediate comment on Wednesday from the companies.

Huntsman made a stalking-horse bid for most of the titanium dioxide (TiO2) plants of Tronox. Huntsman's offer will establish a floor on bids during an auction scheduled for 8 December.

If no one beats Huntsman, then it would win the auction.

Huntsman's bid falls at the low end of similar merger and acquisition (M&A) deals in the chemical industry, according to a statement by Stephen Floyd, a managing director of Young & Partners.

Floyd made his comments as part of a declaration filed with a US bankruptcy court.

Huntsman's bid represents a multiple of 3-3.5 of Tronox's 2010 earnings before interest, tax, depreciation, amortisation and restructuring costs (EBITDAR), Floyd said.

Tronox itself projected a 2010 EBITDAR of $130m, according to a filing with the US Securities and Exchange Commission (SEC).

Comparable, solvent companies are trading at multiples of 6.5-7.0 to their earnings before interest, tax, depreciation and amortisation (EBITDA), Floyd said.

Huntsman's bid was so low because of the limited number of possible buyers and the unusual makeup of the bankruptcy sale process, he said. 

In addition, there is a lack of financial sponsor activity for deals in the chemical industry, Floyd said.

Huntsman's bid does not include Tronox's TiO2 plant in Savannah, Georgia.

The following lists the Tronox plants included in Huntsman's bid:



Hamilton, Mississippi

225,000 tonnes/year

Kwinana, Western Australia*

110,000 tonnes/year

Botlek, the Netherlands

90,000 tonnes/year

*joint venture with Exxaro Resources

($1 = €0.67)

For more on Huntsman visit ICIS company intelligence
For more on TiO2 visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

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