Rockwood Agrees To Sell TiO2 Business To Huntsman In $1.3 Bln Deal

(RTTNews) - Rockwood Holdings, Inc. (ROC) Tuesday announced a definitive agreement to sell its Titanium Dioxide Pigments and four other non-strategic businesses to specialty chemical firm Huntsman Corp. (HUN) for an enterprise value of $1.325 billion, including assumption of $225 million in pension obligations. Huntsman shares added close to 7 percent in pre-market trading.

The businesses being sold include Titanium Dioxide Pigments, Color Pigments & Services, Timber Treatment Chemicals, Rubber/Thermoplastics Compounding, and Water Chemistry.

These businesses had combined net sales of $1.451 billion for twelve months ended December 31, 2012 and $1.539 billion for the last twelve months ended June 30. The transaction is expected to close during the first half of 2014.

Rockwood had announced in January a plan consisting of four strategic initiatives to maximize shareholder value. These included repurchase of $400 million of common shares, target dividend yield of 2.8 to 3.2 percent, repay debt of up to $600 million and launch strategic process for non-core businesses.

Since then, the firm acquired 6.23 million shares at an average price of $64.17 per share, completing the current program on September 5. Additionally, quarterly dividend was boosted to $0.45 per share from $0.35 per share in 2012.

Further, Rockwood repaid over $1.43 billion in principal loans related to secured term debt. The firm also concluded its process with the sale of seven non-strategic businesses for enterprise value totaling $3.9 billion.

Seifi Ghasemi, CEO, said today, "With the sale of these businesses, we have successfully completed, ahead of schedule, all of our key objectives for 2013."

Lazard acted as Rockwood's financial advisor while Hughes Hubbard & Reed LLP and Willkie Farr & Gallagher LLP were its legal advisors.

Meanwhile, Huntsman said the cash purchase price of $1.1 billion represents a multiple of 5.5 times estimated 2014 adjusted EBITDA of $200 million, or 3.3 times including $130 million in expected annual cost savings.

The transaction would be immediately accretive to earnings per share, Huntsman said. It is expected to add $0.60 annual per share accretion assuming 2014 estimated results and full impact of expected cost savings.

ROC closed at $66.61 on Monday. HUN, which closed the previous session at $19.14, is gaining 6.8 percent in pre-market trading.