Huntsman Sale

Huntsman Corp. has signed an agreement to sell its European petrochemical business to Saudi Basic Industries Corp. (SABIC) for $700 million in cash. The transaction will also lower Huntsman's pension liabilities by $126 million.

The sale, expected to be completed by the end of the year, is a big step in Huntsman's previously announced plan to exit the commodity chemical business and focus on differentiated products, according to CEO Peter R. Huntsman. The company recently sold its Texas-based butadiene business and wants to sell its other U.S. commodity assets by the end of the year.

Huntsman acquired its European petrochemical business in 1999 from ICI, which at the time was shifting its own portfolio toward more specialized products. The U.K.-based business had sales last year of $2.5 billion and includes an 865,000-metric-ton-per-year ethylene cracker and an aromatics facility. Not included in the sale are Huntsman's British titanium dioxide and polyurethane intermediates plants, which it also bought from ICI.

For SABIC, the purchase furthers a globalization strategy and, more specifically, its role in the European chemical industry. The largest public company in the Middle East, SABIC became a European manufacturer in 2002 with the purchase of DSM's petrochemical business.

SABIC says it will complete construction, at a cost of $150 million, on a 400,000-metric-ton low-density polyethylene plant in Teesside, England, that Huntsman recently started building. "We are fully committed to realizing the full potential of these businesses," says SABIC CEO Mohamed H. Al-Mady, "and therefore we intend to invest and grow the business in the future, including the continued construction of the new polyethylene plant."