The Deal – Huntsman sold for $9.6B
By Paul Whitfield, June 26, 2007

Basell Holding BV, a Dutch chemicals company owned by Russian billionaire Len Blavatnik, on Tuesday, June 26, agreed to acquire Salt Lake City-based chemical group Huntsman Corp. for $9.6 billion in cash and assumed debt.

The deal provides an exit for Huntsman’s controlling shareholders — the founding family and private equity fund MatlinPatterson Global Opportunities Partners LP — a year and a half after they cut short an auction of the group, citing low bids.

Under the terms of the agreement, Hoofddorp, Netherlands-based Basell will buy Huntsman for $25.25 per share, or about 9.6 times Ebitda. The price represents a 34% premium to the group’s Monday closing price of $18.90 and a 9.8% premium to its February 2005 initial public offering price of $23. Shares in the chemical group have gained about 46% in the past year.

Basell said it would pay $5.88 billion in cash and assume about $3.7 billion of Huntsman debt.

Entities controlled by MatlinPatterson and the Huntsmans, who collectively own 57% of the target’s common stock, have approved the transaction, Hunstman said in a statement.

The pact ends a five-year investment by New York-based MatlinPatterson, which bought debt in Huntsman for about $500 million when the chemical group was close to bankruptcy in 2002 and then converted the holding into a controlling stake. In 2003, MatlinPatterson paid around $200 million for a bolt-on acquisition of Belgian polymers maker Vantico Group SA.

Huntsman went public in a $1.6 billion initial public offering in February 2005, allowing MatlinPatterson to chalk up an unrealized gain on its 35% post-IPO stake, which was valued at about $1.85 billion. MatlinPatterson continues to hold about 35%.

Company founder and chairman Jon Huntsman, whose net worth Forbes last year estimated at $1.6 billion, said his family would use the proceeds from the sale to pursue their charitable work, which focuses on cancer research.

For Basell, the deal provides economy of scale in its supply chain and marketing synergies as well as an enlarged global footprint. A combined Basell and Huntsman would have had combined revenues of more than $26 billion in 2006, of which Huntsman would have contributed $13 billion, and employed approximately 20,900 people.

“This transaction enhances our position as a global industrial group with long-term strategic assets in the chemicals industry,” Blavatnik said in a statement.

Blavatnik bought Basell from BASF AG and Royal Dutch Shell plc in 2005 for $5.2 billion.

The deal ends Huntsman’s long-running search for a buyer, a search that was punctuated by regular asset sales. In February the company sold a chemicals and polymers unit to Wichita, Kan.-based conglomerate Koch Industries Inc. for $742 million. In September 2006, it sold its European petrochemical business to Saudi Arabian Basic Industries Inc. for $826 million and soon after sold its methyl tertiary butyl ether assets to Houston’s Texas Petrochemicals LP for $275 million.

The acquisition, which requires the approval of U.S. and European Union regulators, is expected to close in the fourth quarter of 2007, the companies said.

Huntsman shares late Tuesday afternoon traded at $24.22 on the New Your Stock Exchange, up $5.32, or 28.2%, on their Monday close.

Huntsman took financial advice from Merrill Lynch & Co. and Cowen & Co. LLC. It turned to Vinson & Elkins LLP for legal counsel. Basell turned to Citigroup Inc. for financial advice and took counsel from Skadden, Arps, Slate, Meagher & Flom LLP.