Offer for Huntsman Corp. 'fair'

Analysts following the Huntsman Corp.'s agreement to be acquired by Basell Holdings said Tuesday that Salt Lake-based Huntsman accepted a fair offer.

Huntsman, the U.S. chemical producer whose market value plunged after a 2005 share offering, agreed to be acquired by billionaire Len Blavatnik's Access Industries Holdings LLC for $5.88 billion in cash.

Huntsman shareholders will receive $25.25 a share from Access's chemical unit, Basell Holdings, based in Hoofddorp, Netherlands. That's 34 percent above Monday's closing price and 9.8 percent higher than the initial share sale in February 2005. Access will assume $3.7 billion of debt, Huntsman spokesman Russ Stolle said.

Shares of Huntsman fell 18 percent as of Monday from the Feb. 10, 2005, public offering, compared with a 26 percent gain for the Standard & Poor's 500 Index. Access's Basell unit gains specialty products to diversify its portfolio after it was outbid for General Electric Co.'s plastics unit last month.

Huntsman surged $5.31, or 28 percent, to $24.21 Tuesday in New York Stock Exchange composite trading.

"The only way you could get to a higher price is if you make fairly heroic assumptions," said Jefferies & Co. analyst Laurence Alexander, who rates Huntsman shares "hold." "Basell wanted to diversify into a less commoditized platform, and they had already failed to get the GE Plastics business."

"It's a good deal for Huntsman shareholders," said HSBC Securities analyst Hassan Ahmed, who rates the shares "underweight."

Access, based in New York, acquired Basell in 2005 to become the world's biggest producer of polypropylene plastic. Adding Huntsman will double Basell's annual revenue to $26 billion and add specialty products including ingredients for adhesives and insulation.

"Base chemicals are very cyclical and Western companies have generally been moving away from this type of business into specialty products," said Marcus Konstanti, a chemical analyst at Sal. Oppenheim in Cologne, Germany. "Size is important for base-chemical producers and this should help them compete with companies in the Middle East."

Access's offer of 8.6 times the company's estimated earnings before interest, taxes, depreciation and amortization, or "ebitda," is higher than expected, HSBC's Ahmed said. Commodity chemical makers generally trade at about six times ebitda while specialty producers sell for about seven times, Ahmed said. Huntsman is a blend of the two, he said.