17 September 2013 11:53 [Source: ICIS news]
LONDON (ICIS)--Huntsman is to acquire fellow US producer Rockwood’s performance additives and titanium dioxide (TiO2) business for $1.1bn (€825m) in cash plus unfunded pension liabilities of around $225m, both companies announced on Tuesday.
The deal will make Huntsman the second-largest global producer of TiO2 and inorganic colour pigments, CEO Peter Huntsman said in a statement.
"The transaction announced today is the next step in our long-term value creation strategy for our pigments business,” Huntsman said. “We anticipate TiO2 demand will continue to recover in the coming quarters, and during this time we will be focused on strengthening our world-class pigments business and capturing approximately $130m in expected annual cost savings, to be fully achieved by the end of 2015."
“We plan to further unlock value through a public offering of our new combined pigments business, which we expect to pursue within two years of completing this acquisition.”
The cash purchase price of $1.1bn represents a multiple of 5.5 times estimated 2014 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $200m, or 3.3 times including $130m in expected annual cost savings, Huntsman said in its company statement.
The transaction, which is subject to regulatory approval and customary closing conditions, is expected to close in the first half of 2014.
Rockwood's Performance Additives and TiO2 business manufactures and supplies products that are used in coatings, construction, concrete, plastics, papers, inks, food, cosmetics, pharmaceuticals, fibres and films.
($1 = €0.75)
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