US chemical group Huntsman (The Woodlands, Texas; www.huntsman.com) is to acquire the performance additives and titanium dioxide (TiO₂) pigments businesses from fellow US producer Rockwood Holdings (Princeton / New Jersey; www.rockwoodspecialties.com). Huntsman will pay USD 1.1 bn (EUR 822.5m) in cash and assume estimated unfunded pension liabilities of USD 225m.

Huntsman CEO Peter Huntsman said the deal will make it the second-largest global producer of TiO₂ and inorganic colour pigments. A public offering of the combined businesses is expected within two years of completing the acquisition.

“This acquisition provides a unique opportunity to unlock value within our pigments business and builds on the strong improvements we have made to its competitiveness. We anticipate TiO₂ demand will continue to recover in the coming quarters and during this time we will be focused on strengthening our world-class pigments business and capturing approximately USD 130m in expected annual cost savings, to be fully achieved by the end of 2015,” stated Huntsman.

Last month, when announcing second-quarter results, Huntsman mentioned the possibility of merging the company’s TiO₂ assets with those of a competitor to create a new company spin-off for shareholders – see Plasteurope.com of 06.08.2013. The USD 1.1 bn cash price represents a multiple of 5.5 times estimated 2014 EBITDA of USD 200m. The transaction remains subject to regulatory approvals and usual closing conditions and is expected to complete in the first half of 2014.

Rockwood’s businesses include the manufacture of sulphate-route TiO₂, synthetic iron-oxide and other organic pigments, timber treatment products and speciality automotive materials. Outlets are in the coatings, construction, concrete, plastics, paper, inks, food, cosmetics, pharmaceuticals, fibre and films industries.