The Financial Times – Basell agrees deal to buy Huntsman.
By Doug Cameron, June 27, 2007

Basell, the Dutch chemicals group, yesterday agreed to buy US-based Huntsman for Dollars 5.9bn in a move which will see the family-controlled group devote most of the proceeds to charity.

The proposed deal will double the size of Basell, which was acquired from BASF and Royal Dutch Shell in 2005 by US-based Access Industries, a holding group with chemical, media and real-estate interests controlled by Len Blavatnik, the US industrialist.

Peter Huntsman, chief executive, told the Financial Times that the deal followed an approach from an undisclosed private equity group last month, resulting in discussions with “multiple parties” before the board accepted the offer from Basell. The Dutch group last month lost out to Saudi Arabia’s Sabic in the bidding for General Electric’s Dollars 11bn plastics division.

Huntsman, which floated in 2005, has divested much of its commodities business to focus on less cyclical speciality products, benefiting from the strength of the aerospace and energy sectors. The combined group would match Basell’s range of polyolefins with Huntsman’s expertise in polyurethanes and pigments, with annual sales of Dollars 26bn and 20,900 employees.

Basell is offering Dollars 25.25 a share for Huntsman, whose eponymous family owners control 57 per cent of the stock alongside MatlinPatterson, the US private equity company which helped rescue it from near-bankruptcy in 2001. The proposal, backed by the Huntsman board, represents a 33.6 per cent premium to their pre-announcement close, and the valuation – 7.4 times 2007 ebitda – is at the upper end of recent deals in the sector. The shares had floated at Dollars 23.

Huntsman was built through acquisitions, but a heavy debt burden saw it flirt with bankruptcy, forcing founder Jon Huntsman to sell 49 per cent of thefamily-owned company to MatlinPatterson. His son, Peter, took on the chief executive role and will remain in the position following the Basell takeover as the Huntsman brand is retained.

Peter Huntsman said the group had continued to evaluate exit strategies for MatlinPatterson since the IPO, though had not “aggressively pursued a sale” before recent interest.

The bulk of the family’s holding will be placed in the Huntsman Foundation. Jon Huntsman built up his business from its roots in packaging supplying McDonald’s, among others, with food containers. Mr Huntsman, a devout Mormon, is well known for his philanthropic work, notably in funding cancer research.

Analysts said the valuation was unlikely to attract a rival bid, with the Basell acquisition expected to close in the fourth quarter, subject to shareholder and regulatory approval.