US-based Huntsman Corp has agreed to sell its European bulk chemicals unit to Sabic for $700 million, moving Huntsman closer to its goal of focusing on higher value chemicals.

Sabic said the assets were a good fit with its existing European operations and would allow it to gain scale on the continent.
Huntsman chief executive Peter Huntsman said in a statement, “This is a major step in divesting our commodity businesses as we execute our previously announced strategy of realigning our portfolio to differentiated businesses and paying down debt.”
The US chemicals manufacturer added that in addition to the sale proceeds, the disposal would allow it to reduce its UK pension liabilities by around $126 million.
Huntsman said his company still hoped to sell its US base chemicals operations by the end of the year.
The assets being sold were acquired from London-based Imperial Chemical Industries Plc in 1999, as that company made its own shift toward specialty chemicals.
Huntsman, which has facilities across Britain, said the deal does not include its Teesside, northeast England-based pigments division or Wilton-based aniline and nitrobenzene operations of its polyurethanes division, also in the northeast.
Shailesh Dash, head of research at Kuwait City-based investment bank Global Investment House, said the deal was a good move for Sabic.
“This acquisition will strengthen an already strong long-term outlook for Sabic,” he said.
The deal is the first acquisition in four years for the Saudi group.
It is Sabic’s second acquisition in Europe after it bought DSM’s chemical operations in the Nether-lands and Germany in 2002 for 2.25 billion euros ($2.9 billion).
Sabic is the world’s fourth-largest producer of polyolefins, producing more than five million tonnes per year behind rivals such as Basell and Borealis, according to its website.
Sabic’s European operations produce four million tonnes of chemicals a year.
Sabic’s European unit will issue at least 500 million euros worth of bonds to finance the transaction, Sabic Chief Financial Officer Mutlaq Hamad Al-Morished said.
Polyolefins are base chemicals used to make plastics for materials such as fibres for clothes.
Sabic Chief Executive Mohamed Al-Mady said the recent falls in oil prices had helped make for an “excellent” third quarter, after the company’s profits fell in the second quarter compared to the same period in 2005.
Al-Mady dismissed market speculation that Sabic was considering the flotation of its steel business, saying the unit was integral to the company’s growth plans.