Quarterly report pursuant to Section 13 or 15(d)

BUSINESS COMBINATIONS

v2.4.1.9
BUSINESS COMBINATIONS
 3 Months Ended
Mar. 31, 2015
BUSINESS COMBINATIONS  
BUSINESS COMBINATIONS

3. BUSINESS COMBINATIONS

ROCKWOOD ACQUISITION

        On October 1, 2014, we completed the acquisition of the Performance Additives and Titanium Dioxide businesses (the "Rockwood Acquisition") of Rockwood Holdings, Inc. ("Rockwood"). We paid $1.04 billion in cash, subject to certain purchase price adjustments, and assumed certain unfunded pension liabilities in connection with the Rockwood Acquisition. The acquisition was financed using a bank term loan. The majority of the acquired businesses have been integrated into our Pigments and Additives segment. Transaction costs charged to expense related to this acquisition were nil and $5 million for the three months ended March 31, 2015 and 2014, respectively, and were recorded in selling, general and administrative expenses in our condensed consolidated statements of operations (unaudited).

        The following businesses were acquired from Rockwood:

•

titanium dioxide, a white pigment derived from titanium bearing ores with strong specialty business in fibers, inks, pharmaceuticals, food and cosmetics;

•

functional additives made from barium and zinc based inorganics used to make colors more brilliant, primarily in plastics, coatings, films, food, cosmetics, pharmaceuticals and paper;

•

color pigments made from synthetic iron-oxide and other non-titanium dioxide inorganic pigments used by manufacturers of coatings and colorants;

•

timber treatment wood protection chemicals used primarily in residential and commercial applications;

 

•

water treatment products used to improve water purity in industrial, commercial and municipal applications; and

•

specialty automotive molded components.

        In connection with securing certain regulatory approvals required to complete the Rockwood Acquisition, we sold our TiO2 TR52 product line used in printing inks to Henan Billions Chemicals Co., Ltd. ("Henan") in December 2014. The sale did not include any manufacturing assets but does include an agreement to supply TR52 product to Henan during a transitional period.

        We have accounted for the Rockwood Acquisition using the acquisition method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The preliminary allocation of acquisition cost to the assets acquired and liabilities assumed is summarized as follows (dollars in millions):

                                                                                                                                                                                    

Cash paid for Rockwood Acquisition

 

$
1,038

 

Expected purchase price adjustment receivable

 

 
(25

)

​

​

​  

​  

​

Expected net acquisition cost

 

$
1,013

 

​

​

​  

​  

​

​

​

​  

​  

​  

Fair value of assets acquired and liabilities assumed:

 

 

 

 

Cash

 

$
78

 

Accounts receivable, net

 

 
220

 

Inventories

 

 
400

 

Prepaid expenses and other current assets

 

 
46

 

Property, plant and equipment

 

 
591

 

Intangible assets

 

 
33

 

Deferred income taxes, non-current

 

 
126

 

Other assets

 

 
9

 

Accounts payable

 

 
(146

)

Accrued expenses and other current liabilities

 

 
(80

)

Long-term debt, non-current

 

 
(3

)

Pension and related liabilities

 

 
(233

)

Deferred income taxes, non-current

 

 
(10

)

Other liabilities

 

 
(18

)

​

​

​  

​  

​

Total fair value of net assets acquired

 

$
1,013

 

​

​

​  

​  

​

​

​

​  

​  

​  

        The acquisition cost allocation is preliminary pending final determination of the fair value of assets acquired and liabilities assumed, including final valuation of property, plant and equipment, intangible assets, asset retirement obligations, and environmental and other legal reserves, and finalizing the expected purchase price adjustment receivable. None of the fair value of this acquisition was allocated to goodwill. It is possible that changes to this allocation could occur. If the Rockwood Acquisition were to have occurred on January 1, 2013, the following estimated pro forma revenues and net income attributable to Huntsman Corporation and Huntsman International would have been reported (dollars in millions, except per share amounts):

Huntsman Corporation

                                                                                                                                                                                    

 

 

Pro Forma

 

 

 

Three months
ended
March 31, 2014
(Unaudited)

 

Revenues

 

$
3,133 

 

Net income attributable to Huntsman Corporation

 

 
69 

 

Income per share:

 

 


 

 

Basic

 

$
0.29 

 

Diluted

 

 
0.28 

 

Huntsman International

                                                                                                                                                                                    

 

 

Pro Forma

 

 

 

Three months
ended
March 31, 2014
(Unaudited)

 

Revenues

 

$
3,133 

 

Net income attributable to Huntsman International

 

 
72