We issued an updated research report on Huntsman Corporation HUN on Oct 22.
Huntsman, which is among the prominent players in the chemical space along with Air Products and Chemicals, Inc. APD, Eastman Chemical Company EMN and Celanese Corporation CE, benefits from its investment in downstream businesses and differentiated product innovation as well as strategic acquisitions.
The company remains focused on growing its downstream specialty and formulation businesses and is shifting its MDI (methylene diphenyl diisocyanate) business from components to differentiated systems that typically have higher margins and lower volatility.
Huntsman’s Polyurethanes segment, which accounted for more than half of its revenues last year, is well positioned for strong upside in the long term on the back of its focus on ramping up its high-value differentiated downstream portfolio. Substitution of MDI for less effective materials will remain a key driving factor for the MDI business.
Huntsman should also gain from synergies of strategic acquisitions. The buyout of Demilec, a leading manufacturer and distributor of spray polyurethane foam ("SPF") insulation systems in North America, is expected to offer significant synergies.
Moreover, the acquisition of Icynene-Lapolla, a leading North American manufacturer and distributor of SPF, is in line with Huntsman’s strategy of expanding its downstream polyurethanes business. The combination of Icynene-Lapolla with Demilec is expected to create the world's leading supplier of spray foam products.
The company, in May 2020, also completed the acquisition of CVC Thermoset Specialties, a North American specialty chemical producer that serves industrial composites, adhesives and coatings markets. The buyout is in sync with the company’s strategy of expanding its specialty Advanced Materials portfolio.
According to Huntsman, the integration of CVC Thermoset Specialties and Icynene-Lapolla buyouts is ahead of plans and the company expects to achieve total annualized targeted synergies of $35 million for these acquisitions by the end of 2021.
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