Huntsman completes acquisition of Demilec
On April 23, Huntsman (HUN) announced that it had completed the acquisition of Demilec, a leading manufacturer and distributor of spray polyurethane foam (SPF) insulation systems. Huntsman agreed to buy Demilec on March 13 in an all-cash transaction worth $350 million.
Demilec is set to be aligned with Huntsman’s downstream polyurethane business, bringing Huntsman significant synergy gains. Demilec had annual revenue of ~$170 million. As part of the deal, Huntsman will gain Demilec’s Arlington and Boisbriand facilities.
Huntsman chairman, president, and CEO Peter Huntsman said, “This is a great fit for our downstream growth strategy. We are excited to have Demilec become part of our growing Polyurethanes business. We expect to integrate the business fully by the end of this year when we expect to enjoy integrated SPF EBITDA margins greater than 25%.”
Stock price update
Huntsman stock fell 4.2% and closed at $29.80 in the week ended April 27, trading 6.9% below its 100-day moving average of $32 and indicating weakness in the stock. Year-to-date, the stock has fallen 10.5%. In comparison, Eastman Chemical (EMN), Westlake Chemical (WLK), and Celanese (CE) have gained 12.9%, 1.0%, and 2.1%, respectively. Huntsman also underperformed the First Trust Materials AlphaDEX ETF (FXZ), which has fallen 3.3%. FXZ had 2.7% of its portfolio invested in Huntsman as of April 27.