Chemical maker Huntsman HUN has completed the purchase of Italy-based polyurethane elastomer maker – Tecnoelastomeri – for an undisclosed price. The buyout reinforces the company’s presence in hot-cast elastomer markets.
Tecnoelastomeri, which had sales of roughly $12 million last year, makes and markets methylene diphenyl diisocyanate (“MDI”) based hot-cast elastomer systems and processing machines. Hot-cast polyurethanes are utilized in a range of downstream applications including bumper pads, coated conveyor belts, gears and wheels that are used in the automotive, rail, oil and gas, mining and steel industries, among others.
Huntsman has long been a supplier of MDI for these applications. The company has been investing to beef up its downstream capabilities over the last few years. The acquisition of Tecnoelastomeri adds a highly experienced team to Huntsman’s polyurethanes business and boosts its offerings in the growing downstream hot-cast elastomer markets.
Huntsman’s shares closed roughly 1.1% higher at $23.50 on Tuesday. The stock is down roughly 13% over a year.
Huntsman has the broadest specialized pigments portfolio in the industry, following its acquisition of Rockwood Holdings’ performance additives and TiO2 pigments businesses on Oct 1, 2014. With this buyout, the company is poised to better serve its customers through a broader range of products. The company is also expected to gain from expanding margins owing to the declining costs of raw materials stemming from lower oil prices.
Huntsman, in Mar 2015, said that it will cut 120 positions as part of a planned restructuring of its color pigments unit, reflecting an effort to restructure the company’s global pigments and additives business. The restructuring is expected to deliver cost synergies of $20 million by the middle of next year. Initially, the restructuring will include closures of manufacturing sites, cost-cutting initiatives and actions to centralize shared services.
Huntsman expects that the planned restructuring will allow it to improve its competitiveness and better address customer needs as it is looking to build a market-leading pigments and additives business.
Huntsman currently carries a Zacks Rank #3 (Hold).
Better-ranked chemical stocks include LyondellBasell Industries N.V. LYB, Trecora Resources TREC and Stepan Company SCL with all holding a Zacks Rank #1 (Strong Buy).
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