On December 30, 2016, Huntsman (HUN) announced the completion of the previously announced sale of its European surfactants business to Innospec (IOSP) for an enterprise value of $225 million. The deal was initially announced on August 3, 2016. Peter Huntsman, president and CEO, said, “By completing the sale of this business, we are executing our plan to focus on businesses within our portfolio with a greater long-term strategic fit while continuing to grow our downstream differentiated businesses.”
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The European Surfactants business has revenues around $230 million per year with an estimated $24 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) for 2016. The sale includes manufacturing facilities in France, Italy, and Spain.
Huntsman might classify this sale as discontinued operations effective beginning in January 2017. As a result, the company’s Performance Products segment revenue might be affected beginning in 1Q17. Huntsman intends to reduce its debts from the sale proceeds.
On December 30, 2016, Huntsman stock closed at $19.08 and lost 2.2% for the week. Huntsman underperformed the First Trust Materials AlphaDEX Fund (FXZ), which fell 1.6% for the same period. Huntsman stock traded ~9.2% above the 100-day moving average price of $17.48. In 2016, Huntsman rose 67.8%. Huntsman peer Eastman Chemical (EMN) rose 11.4%, while LyondellBasell (LYB) fell 1.3% in 2016. As of December 30, 2016, Huntsman traded ~155.8% above its 52-week low price of $7.46 and ~1.5% below its 52-week high price of $20.53.
Investors can indirectly hold Huntsman by investing in the First Trust Materials AlphaDEX Fund, which invests 2.2% of its portfolio in Huntsman. In this series, we’ll analyze Huntsman’s leverage position and interest payment.
In the next part, we’ll analyze Huntsman’s debt-to-equity ratios.