Business News : Exclusive: Bank of America shops Huntsman to PE firms: sources

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NEW YORK (Business News) - Bank of America Merrill Lynch (BAC.N) has reached out to several top U.S. private equity firms to gauge their interest in a potential deal for Huntsman Corp (HUN.N), sources said, in the latest sign the U.S. chemicals company may be considering a sale.

KKR & Co (KKR.N), Bain Capital, Advent International and Warburg Pincus WP.UL are among private equity firms that the bankers have reached out to in recent weeks, the sources familiar with the situation said.

Huntsman has a market value of about $ 2.8 billion and nearly $ 4 billion of debt, according to Business News data.

It could not be learned whether Bank of America, which has a close relationship with Huntsman, was making the calls on behalf of Huntsman or on its own.

Merrill Lynch, now part of Bank of America, advised Huntsman when it tried to sell itself in 2007.

Huntsman, Bank of America and the private equity firms declined to comment.

The calls come after Huntsman's founder, Jon Huntsman, said in March that the compa ny was open to all options to create shareholder value.

Huntsman was founded in 1970 and is now run by Jon Huntsman's son, Peter. The elder Huntsman and his family are still the largest shareholders of the company, with nearly 20 percent of its shares. One of Huntsman's other sons is Jon Huntsman, the former U.S. ambassador to China who tried but failed to become the Republican candidate in this year's presidential election.

Huntsman, which makes chemicals used in paint, clothing, housing, construction and cars, has long been pegged as a candidate for a takeover. It has tried to sell itself before.

Moreover, several large private equity firms have bid on DuPont's (DD.N) car paint unit, suggesting that there is interest from buyout funds in the chemicals sector.

Huntsman's assets may not have the s ame draw as the DuPont business. Last summer Huntsman's stock was trading around $ 20 per share - the company's highest value since the stock plunged to around $ 3 per share in early 2009, when demand fell and Wall Street took a negative view of the company's large debt load.

But as crude oil and other supply costs rose, investors worried that Huntsman wouldn't be able to pass on those costs to customers indefinitely. Those fears were confirmed last August, when Huntsman reported a lower-than-expected quarterly profit, citing rising supply costs.

The miss caused Huntsman's stock to lose nearly a third of its value in one day. The stock has yet to recover and is now trading at around $ 12 a share.

Huntsman may prove to be too big for a private equity firm to swallow whole on its own. Bankers who have looked at the company suggest that it would take an equity ch eck of up to $ 2 billion and would require a consortium of as many as three private equity firms, which would complicate any deal.

At least some of the buyout firms contacted by Bank of America - including KKR and Advent - have already decided to pass on the opportunity, some of the sources said.


The company has been a rumored takeover target since the failed 2007 deal. Its founder's recent focus on his philanthropy - "my job is to cure cancer," he told investors in March - has further fueled speculation that he would be interested in selling out.

Huntsman, a four-time cancer survivor, created the Huntsman Cancer Institute and has put $ 1.2 billion into charity.

Indeed, he said in March that the company was "sought-after by many other people" and was open to all options, noting that he was disappointed with the current stock market valuation of the company.

"As the largest shareholder and as the chairman of our board - executive chairman - we're going to do something in 2012 that improves shareholder value substantially," Huntsman said, speaking at the company's investor day.

Apollo Global Management's (APO.N) Hexion Specialty Chemicals unit had agreed to buy Huntsman for $ 6.5 billion in July 2007. The private equity firm had offered Huntsman $ 28 a share, topping a previous deal with Dutch company Basell AF.

The deal faltered amid the credit crisis and legal battles as Apollo tried to walk away from the deal, citing insolvency concerns about the combined company.

Huntsman received a $ 750 million payout from the private equity firm for walking away from the d eal.

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