Quarterly report pursuant to Section 13 or 15(d)

BUSINESS COMBINATIONS

v2.4.0.8
BUSINESS COMBINATIONS
 9 Months Ended
Sep. 30, 2014
BUSINESS COMBINATIONS  
BUSINESS COMBINATIONS

3. BUSINESS COMBINATIONS

ROCKWOOD ACQUISITION

        On October 1, 2014, we completed the Rockwood Acquisition and paid $1.04 billion in cash, subject to certain purchase price adjustments, and assumed certain unfunded pension liabilities in connection with the Rockwood Acquisition. For more information, see "Note 1. General—Recent Developments—Rockwood Acquisition." The majority of the acquired businesses will be integrated into our Pigments segment. Transaction costs charged to expense related to this acquisition were $10 million for the nine months ended September 30, 2014 and were recorded in selling, general and administrative expenses in our condensed consolidated statements of operations (unaudited).

        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):

Acquisition cost

   $ 1,039  
       
​ ​ ​ ​ ​
​ ​ ​ ​ ​
       

Fair value of assets acquired and liabilities assumed:

        

Cash

   $ 68  

Accounts receivable, net

     248  

Inventories

     485  

Prepaid expenses and other current assets

     31  

Property, plant and equipment

     423  

Intangible assets

     188  

Deferred income taxes, non-current

     106  

Other assets

     10  

Accounts payable

     (154 )

Accrued compensation

     (45 )

Accrued expenses and other current liabilities

     (45 )

Long-term debt, current

     (2 )

Long-term debt, non-current

     (4 )

Pension and related liabilities

     (240 )

Other liabilities

     (30 )
       
​ ​ ​ ​ ​

Total fair value of net assets acquired

   $ 1,039  
       
​ ​ ​ ​ ​
​ ​ ​ ​ ​
       

        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 and intangible assets. For purposes of this preliminary allocation of fair value, we have assigned any excess of the acquisition cost of historical carrying values to property, plant and equipment and no amounts have been allocated to goodwill. It is possible that changes to this allocation could occur. The estimated pro forma revenues and earnings information for the three and nine months ended September 30, 2014 and 2013 has not been provided as that information is not yet available.

OXID ACQUISITION

        On August 29, 2013, we completed the acquisition of the chemical business of Oxid L.P. (the "Oxid Acquisition"), a privately-held manufacturer and marketer of specialty urethane polyols based in Houston, Texas. The acquisition cost of approximately $76 million consists of cash payments of approximately $66 million and contingent consideration of $10 million. The contingent consideration relates to an earn-out agreement which will be paid over two years if certain conditions are met. Related to this earn-out agreement, $6 million was paid during the nine months ended September 30, 2014. The acquired business has been integrated into our Polyurethanes segment. Transaction costs charged to expense related to this acquisition were not significant.

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

Cash paid for acquisition

   $ 66  

Contingent consideration

     10  
       
​ ​ ​ ​ ​

Acquisition cost

   $ 76  
       
​ ​ ​ ​ ​
​ ​ ​ ​ ​
       

Fair value of assets acquired and liabilities assumed:

        

Accounts receivable

   $ 9  

Inventories

     14  

Property, plant and equipment

     22  

Intangible assets

     36  

Accounts payable

     (4 )

Accrued liabilities

     (1 )
       
​ ​ ​ ​ ​

Total fair value of net assets acquired

   $ 76  
       
​ ​ ​ ​ ​
​ ​ ​ ​ ​
       

        Intangible assets acquired consist primarily of developed technology and customer relationships, both of which will be amortized over 15 years. If the Oxid 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):

Huntsman Corporation

 
   Pro Forma  
 
   Three months
ended
September 30, 2013
(Unaudited)		   Nine months
ended
September 30, 2013
(Unaudited)		  

Revenues

   $ 2,868   $ 8,446  

Net income attributable to Huntsman Corporation

     67     94  

Huntsman International

 
   Pro Forma  
 
   Three months
ended
September 30, 2013
(Unaudited)		   Nine months
ended
September 30, 2013
(Unaudited)		  

Revenues

   $ 2,868   $ 8,446  

Net income attributable to Huntsman International

     71     101