Huntsman Sells Textile Effects Unit to Archroma
The transaction that assigns a total enterprise value of $718 million to the business, includes around $125 million in net underfunded pension liabilities as of Dec. 31, 2021. Subject to regulatory approvals and other customary closing conditions, it is expected to close in the first half of 2023.
Huntsman said the purchase is being partially funded with preferred equity. The Woodlands, Texas-based company will take up to $80 million of the sum, which SK Capital Partners will seek to syndicate prior to the deal’s closing.
Over the past half year, chairman, president and CEO, Peter Huntsman, said the family-company conducted a comprehensive strategic review of the division and, after detailed discussions with a wide range of parties, its board decided that the private equity group would be a better owner of the business over the long-term.
In fiscal 2022, which ended on Jun. 30, the Textile Effects division reported sales of $772 million and adjusted EBITDA of $94 million. Huntsman said it expects cash taxes of about $50 million on the divestment. From the ongoing third quarter of 2022, it will report the activities as discontinued operations.
Cash proceeds from the sale will be deployed in line with Huntsman’s current balanced capital allocation program, which includes strategic investments and acquisitions to further strengthen core businesses. Cash will also be returned to shareholders through dividends and a share repurchase program.
After closing, Textile Effects will combine with SK Capital's Archroma business to create a world leader in textile chemicals and dyes, with a strong position in sustainability and innovation, Huntsman said.
Both the Huntsman division and Archroma are founding members of Sustainable Chemistry for the Textile Industry (SCTI), an alliance of leading chemical companies that strives to empower the textile and leather industries to apply sustainable, state-of-the-art chemistry solutions.
Archroma’s product portfolio, which it has pieced together over the past nine years from acquisitions of previously merged businesses as well as its own R&D investments, includes assets that are the legacy of companies such as Ciba Specialties, Sandoz, Hoechst, Clariant, BASF and Dohmen.
Author: Dede Williams, Freelance Journalist