Basell to buy Huntsman for about $5.6 billion

Chemicals maker Basell said on Tuesday it has agreed to buy US chemical company Huntsman Corp for $5.6 billion excluding debt, in a bid to strengthen its position as a global chemicals group.
Under the terms of the agreement, Basell will acquire all of the outstanding common stock of Woodlands, Texas-based Huntsman for $25.25 per share, the companies said in a statement.
Dutch-based Basell, which is owned by privately held US industrial group Access Industries, is a leading producer of polypropylene, which is used in products like textiles, reusable containers and laboratory equipment. The deal would broaden Basell's holdings and give it access to Huntsman's technology, which is used in paints, footwear and cleaning products.
"When you go out and make this sort of an acquisition, obviously you need to justify it with certain synergy estimates, I struggle to see how Basell is going to justify this," HSBC analyst Hassan Ahmed said.
Ahmed noted that the deal represents great value for Huntsman's shareholders and it values the company at about 8.6 times earnings before interest, taxes, depreciation and amortisation.
Huntsman shares jumped 28.4 percent to $24.27 in afternoon trading on the New York Stock Exchange. The deal is worth $5.6 billion based on just fewer than 222 million Huntsman shares outstanding as of May 1. Including debt, the deal is valued at about $9.6 billion.
"The combined company will have an extensive geographic footprint, with operations on all continents of the world, and will be well positioned in fast-growing markets such as China, India, Eastern Europe and Latin America," the companies said.
The two groups had combined revenue of more than $26 billion last year, they said.
"From our perspective, for our shareholders today, for our employees today and so forth, I think that it's a very good deal for them and I think for the buyers, as you take a longer term approach ... it's going to be great for them as well," said Huntsman's Chief Executive Peter Huntsman, in an interview with Reuters. "This is an opportunity for Access to build on their stated objective of building a great global chemical company," he added.
Huntsman also said he would not rule out acquisitions of small assets over the next few months. "The worst thing that we could do for the Access group and the Basell group is for us to stop creating value," said Huntsman. Entities controlled by private-equity fund MatlinPatterson and the Huntsman family, who collectively own 57 percent of Huntsman's common stock, have agreed to the deal with Basell.