Huntsman Said to Consider Bid for Rockwood Titanium Unit

Huntsman Corp., the U.S. chemicals producer founded by Jon Huntsman Sr., is considering an offer for Rockwood Holdings Inc.’s titanium-dioxide pigments business, three people with knowledge of the situation said.

Huntsman officials have traveled to Germany to conduct due diligence on Rockwood’s Sachtleben unit and assess potential savings from merging it with their company’s pigments operation, said the people, who asked not to be identified because details of the deliberations are private.

Such a deal would create a titanium-dioxide maker with about 15 percent of global capacity, vying with Cristal Global as the world’s second-largest, after market leader DuPont Co. Salt Lake City-based Huntsman had $1.44 billion in pigment sales last year while Rockwood had $889 million in revenue from titanium dioxide. Also known by its chemical formula Ti02, the chemical is used as a whitener in paint and toothpaste.

Nahla Azmy, a Rockwood spokeswoman, declined to comment on the status of the company’s efforts to separate the TiO2 unit. She reiterated that the company plans to sell or spin off the unit tax-free to shareholders by year-end. Gary Chapman, a Huntsman spokesman, declined to comment.

Huntsman fell 2 percent to $16.59 in New York trading while Rockwood climbed 1.6 percent to $65.52.

Huntsman Chief Executive Officer Peter Huntsman said in April that his company wants “to be part of any consolidations in this industry.” He may face competition from rival U.S. TiO2 producer Tronox Ltd., whose Chairman and CEO Tom Casey said in February his company was considering buying assets from Rockwood.

Private Equity

A deal with Huntsman would ease the way for Rockwood Chairman and CEO Seifi Ghasemi to sell his company’s performance-additives business. Rockwood, which is being advised by Lazard Ltd. on asset sales, previously offered its Ti02 business together with the additives unit in an auction that attracted interest from private-equity firms Bain Capital Partners LLC and Advent International, the people said. Representatives for Bain and Advent declined to comment.

That process failed to garner bids that met with Rockwood’s $2 billion valuation, the people said. Princeton, New Jersey-based Rockwood is now planning to pursue talks with the most promising suitors for the additives division, the people said.

As a prelude to a sale of the TiO2 business, Rockwood purchased the 39 percent of Sachtleben it didn’t already own from Kemira Oyj for 97.5 million euros ($127 million) in February.

Declining Prices

Huntsman has looked at Sachtleben in the past and the current opportunity may allow it to buy the business at a cheaper price than might previously have been the case, two of the people said. TiO2 demand and prices have declined in the past year and earnings before interest, taxes, depreciation and amortization fell 36 percent to $165 million at Rockwood’s Ti02 business in 2012, according to data compiled by Bloomberg.

DuPont, which is based in Wilmington, Delaware, has about 20 percent of global TiO2 capacity, Saudi Arabia’s Cristal has 15 percent, and Huntsman and Dallas-based Kronos Worldwide Inc. have 10 percent apiece, according to a June presentation from Huntsman.

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