Huntsman Divestiture

Huntsman Corp. will complete its exit from commodity chemicals by selling its North American petrochemicals unit to Flint Hills Resources, the chemicals and refining arm of privately held Koch Industries. The transaction, between two family-run companies, is valued at about $761 million.

Flint Hills will get Huntsman's ethylene cracker in Port Arthur, Texas; its ethylene, propylene, polyethylene, and polypropylene complex in Odessa, Texas; an expandable polystyrene plant in Peru, Ill.; and polypropylene plants in Longview, Texas, and Marysville, Mich. Overall, the businesses employ about 900 people.

The deal is expected to close in the third quarter, following regulatory approvals and the completion of repairs at the Port Arthur cracker, which was damaged by a fire last April.

Huntsman will retain its Port Neches, Texas, ethylene cracker, which provides feedstocks for its specialty chemical businesses.

Early last year, Huntsman stated its intention to spin off its commodity chemicals business as a separate company and focus on specialty chemicals such as titanium dioxide pigments, epoxy resins, and surfactants. The company ended up selling off the commodities business in pieces, however. It sold its butadiene operation to Texas Petrochemicals in June 2006 for $262 million, and its European petrochemicals unit went to Saudi Basic Industries Co. in December 2006 for $810 million.

Koch has made a string of acquisitions in chemicals in recent years. In 2003, it purchased Farmland Industries' fertilizer unit. In 2004, it bought DuPont's Invista fibers business and BP's purified isophthalic acid and trimellitic anhydride operations.