From Deseret News archives:

Huntsman shares plunge

Market value drops after buyout talks break off

Published: Monday, Feb. 6, 2006 9:22 p.m. MST
 |  E-MAIL | PRINT | FONT + - 
Shares of Salt Lake-based Huntsman Corp., the fourth-largest U.S. chemical maker, plunged the most since its public offering a year ago Monday after the company broke off talks with potential buyers because their bids were too low.

Huntsman fell $1.90, or 8.3 percent, to close at $21.05 per share on the New York Stock Exchange, reducing the company's market value by about $419 million to $4.64 billion. The rejected bids were above the February 2005 offering price of $23 a share, Huntsman said.

Billionaire founder Jon M. Huntsman Sr. and investor David Matlin, who owns 35 percent, considered a sale after investors sent the shares down as much as 27 percent amid concern that rising costs will erode profit. Huntsman and Matlin aimed to shed their controlling stakes before chemical earnings begin to slide, Greenwich Consultants analyst Michael Judd said.

"They were unhappy with the stock price and looking for an exit strategy," Judd said Monday in a telephone interview. "It's no coincidence the company went public during the big euphoria" about resurgent chemical profits, Judd said. He recommends selling the shares.

Before Monday, Huntsman shares had risen 18 percent since Jan. 30, before talks were disclosed.

Story continues below
The company can boost its share price by continuing to generate cash for debt reduction and for investing in specialty chemicals, which are more profitable than commodity chemicals, said Jeffries & Co. analyst Laurence Alexander.

"It appears unlikely that another buyer would emerge with a significantly higher offer," Alexander said Monday in an interview from New York. "We expect them to remain in the trading range of the last few months until there is more clarity on their ability to improve free cash flow in 2006." He rates the shares "neutral."

Total debt was cut $1.86 billion, or almost 30 percent, to $4.44 billion as of Sept. 30 from $6.3 billion at the end of 2004, Huntsman said in November.

The stock probably will give back most of last week's gains of $3.55 per share, JP Morgan analyst Jeffrey Zekauskas said Monday in a note to clients. He rates the shares "neutral."

Discussions had been held with a number of potential acquirers or merger partners since a potential buyer made an "expression of interest" late last year, the company said last week. Spokesman Don Olsen declined to comment further, saying Huntsman won't discuss who made offers or how much they offered.

The offers "were not adequate, particularly in light of the risks, uncertainties and extended timing of the proposed transactions," Chairman Huntsman, 68, said in a Sunday statement.

Comments

You can be the first to comment on this story.

previousnext

Latest comments

That game was amazing! I think this will really help the sport grow in Utah....

Real Champions

Congrats on a great win. Utah as a whole should be proud not just of a major...

Congrats Real Salt Lake! but, they aren't the first major sports team to...

RSL regroups, dominates 2nd half

I told ALL of you how much i liked NED Pure irony his contributions vs x...

RSL wins MLS Cup on penalty kicks

this is to NevadaUTE @ 10:25!!! I love soccer, I love Real and it brought a...

Real Champions

wow!!! amazing. UTAH JAZZ DO SOMETHING!!!

Glenn Beck to enter politics?

So much fear and anger from Beck lovers. You all lost the last election, we...

RSL wins MLS Cup on penalty kicks

This is the most emotion I have had watching a sporting event since my...

Nicky Rimando is my hero! I love that guy. He has had his detractors, but...

Real Champions

Two stars means nothing! We played as a team and it showed! I'm still in...

Advertisements