Banking & Finance

Huntsman Back In M&A Play! Private Equity Deal Returns From Dead (HUN, APO, BAC, KKR, DD, DOW)

Huntsman Corporation (NYSE: HUN) is rumored to be back in play.  If you will recall, this was the subject of a private equity buyout back during the private equity bubble and its $6.5 billion buyout fell apart. Reuters and CNBC reported that Bank of America Corporation (NYSE: BAC), via BofA/ML, has reached out to KKR& Co. (NYSE: KKR) and other private equity firms to see what interest there would be. Huntsman trades at only about 6-times 2012 and 2013 earnings estimates.

Apollo Global Management, LLC (NYSE: APO) was the previous acquirer via its Hexion Specialty Chemicals unit.  This company was literally gutted during the recessionary stock sell-off and even a 6% gain to $12.62 today is not a 52-week high. Huntsman settled with Apollo for far more than the $325 million breakup fee. Huntsman trades in a 52-week range of $8.13 to $20.36.  The question to ask is just what sort of premium it can garner in a private equity consortium deal.  The market cap here is $2.9 billion and the dividend is 3.3%.

The chemicals player valuation compares to E. I. du Pont de Nemours and Company (NYSE: DD) trades at 11.4-times expected 2012 earnings and The Dow Chemical Company (NYSE: DOW) and about 12.4-times expected 2012 earnings.

Currently, the consensus analyst price target is $17.10 according to Thomson Reuters. Talk about a blast from the past!

As with all stories of this sort, we would treat this as a rumor until more concrete data surfaces.

JON C. OGG

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