Tuesday before the bell, massive polyolefins producer Basell announced it would buy all common shares of Huntsman Corp. for $5.5 billion in cash, good for $25.25 a share. Including debt, the deal, which is expected to close in the fourth quarter, is valued at $9.6 billion. The offer represents a 34% premium to Monday's closing price of $18.90; shares reacted by jumping 28% to a closing price of $24.21. Shareholders and regulators in the U.S. and Holland (where Basell is based) must approve of the deal before it can close. Basell is a division of industrialist Leonard Blavatnik’s Access Industries, the world's largest producer of polypropylene and advanced polyolefin products. The boards of both companies have already approved of the deal, as has the Huntsman family of Utah, which owns 57% of the shares outstanding. Utah Gov. Jon Huntsman Jr. sold off his shares of Huntsman Corp. upon taking office in 2005. Basell and Huntsman combined for revenue of $26 billion in 2006. Goldman Sachs analyst Edlain Rodriguez believes the companies will retain their full earnings power, as there is "little overlap in their businesses."
Sources: Press Release, Wall Street Journal, Bloomberg, New York Times DealBook, AP, Reuters
Commentary: Only Offer For Huntsman, But Other Chemical Companies Are Targets • Through The Fly's Eyes: M&A • US Slipping Behind?
Stocks/ETFs to watch: Huntsman Corporation (NYSE:HUN). Competitors: E.I. du Pont de Nemours & Company (NYSE:DD), Lyondell Chemical Company (LYO), The Dow Chemical Company (NYSE:DOW). ETFs: Materials Select Sector SPDR (NYSEARCA:XLB), iShares Dow Jones US Basic Materials Index (NYSEARCA:IYM), Vanguard Materials VIPERs (NYSEARCA:VAW)
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