Venture to buy Texaco Chemical for $1.06 billion

A U.S.-Australian joint venture has agreed to purchase Texaco Chemical Co. (TCC) for $1.06 billion, enabling parent Texaco Inc. to substantially withdraw from the petrochemical business. Huntsman Corp., a 50-50 venture of Huntsman Financial Corp. (HFC), Salt Lake City, and Consolidated Press Holdings (CPH), Sydney, will purchase TCC and almost all its worldwide operations.

Sept. 20, 1993

3 min read

A U.S.-Australian joint venture has agreed to purchase Texaco Chemical Co. (TCC) for $1.06 billion, enabling parent Texaco Inc. to substantially withdraw from the petrochemical business.

Huntsman Corp., a 50-50 venture of Huntsman Financial Corp. (HFC), Salt Lake City, and Consolidated Press Holdings (CPH), Sydney, will purchase TCC and almost all its worldwide operations.

Included in the sale is an option for Huntsman Corp. to purchase either 50% or 100% of Texaco's propylene oxide/methyl tertiary butyl ether (PO/ MTBE) complex under construction at Port Neches, Tex. Texaco will retain its chemical operations at its El Dorado, Kan., refinery and Star Enterprises' Delaware City, Del., refinery.

Company details

TCC manufactures commodity and specialty chemicals at six plants in the U.S. in addition to plants in Canada, Belgium, U.K., Brazil, and Colombia. Its main products include ethylene, propylene, ethylene oxide, ethylene glycol, butadiene, MTBE, surfactants, lubricant/fuel additives, and performance chemicals. TCC employs more than 2,600 full time employees and almost 2,500 contract employees.

HFC is a 100% family owned business and affiliate of Huntsman Chemical Corp., the biggest privately held U.S. chemical concern. The Huntsman family will manage and operate the joint venture. TCC Pres. Ralph Cunningham will become president of Huntsman Corp.

Huntsman founded Huntsman Chemical in 1982 through the purchase of Shell Chemical Co.'s polystyrene division and has made a number of significant acquisitions in the petrochemical business since then. Prior to the TCC purchase, it employed more than 5,000 employees at 44 sites in 15 countries.

Huntsman expects record sales revenues of more than $1.85 billion for all Huntsman companies in 1993 and predicts the Texaco acquisition will boost revenues to more than $3.1 billion/ year. TCC's 1992 sales revenues were $1.462 billion. When complete in 1994, the Port Neches PO/MTBE complex is expected to generate another $500 million/year in revenues, Huntsman said.

Strategic fit

CPH is a private company owned by Kerry Packer. Huntsman founder Jon Huntsman and Packer joined in June to acquire Chemplex Australia Ltd.'s petrochemical complexes in Melbourne.

The partners plan to use the Texaco purchase as the cornerstone for aggressive expansion, including future acquisitions of other chemical companies.

"This acquisition is strategically critical to the Huntsman companies because it affords us a wide array of products we do not manufacture," Huntsman said.

Huntsman earlier this year acquired Mobil Chemical Co.'s Design Products polyethylene business and signed a contract to acquire Princeton Packaging's converted products and specialty film divisions.

The acquisition introduces the South American market to Huntsman and adds Belgium, Brazil, Colombia, and Wales to its operations. It also gives a fully integrated product line to Huntsman, whose four North American divisions produce polystyrene, polypropylene, styrene monomer, and expandable resins.

In addition, the TCC acquisition introduces Huntsman into the U.S. clean motor fuels program through production and marketing of methanol and MTBE.