The Urethane Blog

February 25, 2020

FXI and Innocor to Divest Three Plants

FTC Requires Polyurethane Foam Producers FXI Holdings, Inc. and Innocor, Inc. To Divest Assets in Three Regional Markets

Agency alleges merger would reduce competition among producers of foam used in home furnishings

For Release

Polyurethane foam producers FXI Holdings, Inc. and Innocor, Inc. have agreed to divest polyurethane foam pouring plants in three regional markets to Future Foam, Inc., to settle Federal Trade Commission charges that FXI’s proposed $850 million acquisition of Innocor would violate federal antitrust law.

The FTC alleges that the combination of FXI and Innocor would substantially lessen competition for low-density conventional polyurethane foam used in home furnishings in three regional markets: the Pacific Northwest (Oregon and Washington); the Midwest states of Indiana, Michigan, and Ohio; and Mississippi.

The complaint states that regional markets are appropriate because low-density foam is bulky and expensive to ship, relative to the value of the product. FXI and Innocor are the only suppliers in the Pacific Northwest, two of three major suppliers in the Midwest states, and two of four major suppliers in Mississippi, according to the complaint.

The complaint alleges that without a remedy, the proposed acquisition would eliminate direct and substantial competition between FXI and Innocor and would increase the likelihood of coordinated interaction among the remaining competitors in each regional market.

To remedy the proposed transaction’s anticompetitive effects, the proposed order requires the companies to divest FXI’s foam-pouring plant in Kent, Washington and Innocor’s foam-pouring plants in Elkhart, Indiana and Tupelo, Mississippi to Future Foam no later than 10 days after the close of the acquisition. Further information about the consent agreement—including details on transitional assistance and the appointment of a monitor—are set forth in the analysis to aid public comment for this matter.

The Commission vote to issue the complaint and accept the proposed consent order for public comment was 5-0. The FTC will publish the consent agreement package in the Federal Register shortly. Instructions for filing comments appear in the published notice. Comments must be received 30 days after publication in the Federal Register. Once processed, comments will be posted on Regulations.gov.

https://www.ftc.gov/news-events/press-releases/2020/02/ftc-requires-polyurethane-foam-producers-fxi-holdings-inc-innocor

February 25, 2020

FXI and Innocor to Divest Three Plants

FTC Requires Polyurethane Foam Producers FXI Holdings, Inc. and Innocor, Inc. To Divest Assets in Three Regional Markets

Agency alleges merger would reduce competition among producers of foam used in home furnishings

For Release

Polyurethane foam producers FXI Holdings, Inc. and Innocor, Inc. have agreed to divest polyurethane foam pouring plants in three regional markets to Future Foam, Inc., to settle Federal Trade Commission charges that FXI’s proposed $850 million acquisition of Innocor would violate federal antitrust law.

The FTC alleges that the combination of FXI and Innocor would substantially lessen competition for low-density conventional polyurethane foam used in home furnishings in three regional markets: the Pacific Northwest (Oregon and Washington); the Midwest states of Indiana, Michigan, and Ohio; and Mississippi.

The complaint states that regional markets are appropriate because low-density foam is bulky and expensive to ship, relative to the value of the product. FXI and Innocor are the only suppliers in the Pacific Northwest, two of three major suppliers in the Midwest states, and two of four major suppliers in Mississippi, according to the complaint.

The complaint alleges that without a remedy, the proposed acquisition would eliminate direct and substantial competition between FXI and Innocor and would increase the likelihood of coordinated interaction among the remaining competitors in each regional market.

To remedy the proposed transaction’s anticompetitive effects, the proposed order requires the companies to divest FXI’s foam-pouring plant in Kent, Washington and Innocor’s foam-pouring plants in Elkhart, Indiana and Tupelo, Mississippi to Future Foam no later than 10 days after the close of the acquisition. Further information about the consent agreement—including details on transitional assistance and the appointment of a monitor—are set forth in the analysis to aid public comment for this matter.

The Commission vote to issue the complaint and accept the proposed consent order for public comment was 5-0. The FTC will publish the consent agreement package in the Federal Register shortly. Instructions for filing comments appear in the published notice. Comments must be received 30 days after publication in the Federal Register. Once processed, comments will be posted on Regulations.gov.

https://www.ftc.gov/news-events/press-releases/2020/02/ftc-requires-polyurethane-foam-producers-fxi-holdings-inc-innocor

February 20, 2020

Huntsman Completes Acquisition

Huntsman Completes the Acquisition of Icynene-Lapolla, Expanding its Downstream Footprint in Spray Polyurethane Foam Insulation

THE WOODLANDS, Texas, Feb. 20, 2020 /PRNewswire/ — Huntsman Corporation (NYSE: HUN) today announced that it has completed the acquisition of Icynene-Lapolla, a leading North American manufacturer and distributor of spray polyurethane foam (SPF) insulation systems for residential and commercial applications.  Huntsman acquired the business from an affiliate of FFL Partners, LLC, for $350 million, subject to customary closing adjustments, in an all-cash transaction funded from available liquidity.

The acquisition of Icynene-Lapolla is aligned with Huntsman’s strategy of growing its downstream polyurethanes business. The combination of Icynene-Lapolla with Demilec, the SPF business Huntsman acquired in 2018, will create the world’s leading supplier of spray foam products used to insulate commercial and residential structures.  The acquisition will further strengthen our portfolio of leading energy-saving insulation applications and technologies, providing customers with an unmatched product offering. Further, it will accelerate the globalization of the combined SPF business by leveraging Huntsman’s extensive international network of systems houses. The acquisition will generate substantial synergies as a result of Huntsman’s ability to pull through significant volumes of polyols and lower margin upstream polymeric MDI into the higher margin and growing specialized SPF systems.

Icynene-Lapolla has annual revenues of approximately $230 million with two manufacturing facilities located in Houston, Texas and Mississauga, Ontario, where it produces a full range of MDI-based SPF formulations and reflective roof coatings, which it markets directly to applicators as well as through distributors.

Tony Hankins, President of Huntsman’s Polyurethanes division, commented on the acquisition: “I am excited about the opportunities that lie ahead, now that Icynene-Lapolla is joining our high-growth MDI urethanes insulation business. Together with Demilec, our existing SPF business, we will create a world-leading SPF platform, providing highly innovative, energy-saving solutions for residential and commercial property owners alike.” 

Peter Huntsman, Chairman, President and CEO added: “SPF is a highly attractive growth business and Icynene-Lapolla is widely recognized as a leading player in the industry. Icynene-Lapolla will strengthen our move downstream and provide further impetus to the globalization of our SPF technology.  The purchase price represents an adjusted EBITDA multiple of approximately 10 times, or approximately 7 times adjusted EBITDA, pro forma for synergies.  The combined business is now approaching $500 million in revenues and by the end of 2021 with synergies we see the SPF business exceeding $100 million in EBITDA.”  

https://ir.huntsman.com/news-releases/detail/428/huntsman-completes-the-acquisition-of-icynene-lapolla

February 20, 2020

Huntsman Completes Acquisition

Huntsman Completes the Acquisition of Icynene-Lapolla, Expanding its Downstream Footprint in Spray Polyurethane Foam Insulation

THE WOODLANDS, Texas, Feb. 20, 2020 /PRNewswire/ — Huntsman Corporation (NYSE: HUN) today announced that it has completed the acquisition of Icynene-Lapolla, a leading North American manufacturer and distributor of spray polyurethane foam (SPF) insulation systems for residential and commercial applications.  Huntsman acquired the business from an affiliate of FFL Partners, LLC, for $350 million, subject to customary closing adjustments, in an all-cash transaction funded from available liquidity.

The acquisition of Icynene-Lapolla is aligned with Huntsman’s strategy of growing its downstream polyurethanes business. The combination of Icynene-Lapolla with Demilec, the SPF business Huntsman acquired in 2018, will create the world’s leading supplier of spray foam products used to insulate commercial and residential structures.  The acquisition will further strengthen our portfolio of leading energy-saving insulation applications and technologies, providing customers with an unmatched product offering. Further, it will accelerate the globalization of the combined SPF business by leveraging Huntsman’s extensive international network of systems houses. The acquisition will generate substantial synergies as a result of Huntsman’s ability to pull through significant volumes of polyols and lower margin upstream polymeric MDI into the higher margin and growing specialized SPF systems.

Icynene-Lapolla has annual revenues of approximately $230 million with two manufacturing facilities located in Houston, Texas and Mississauga, Ontario, where it produces a full range of MDI-based SPF formulations and reflective roof coatings, which it markets directly to applicators as well as through distributors.

Tony Hankins, President of Huntsman’s Polyurethanes division, commented on the acquisition: “I am excited about the opportunities that lie ahead, now that Icynene-Lapolla is joining our high-growth MDI urethanes insulation business. Together with Demilec, our existing SPF business, we will create a world-leading SPF platform, providing highly innovative, energy-saving solutions for residential and commercial property owners alike.” 

Peter Huntsman, Chairman, President and CEO added: “SPF is a highly attractive growth business and Icynene-Lapolla is widely recognized as a leading player in the industry. Icynene-Lapolla will strengthen our move downstream and provide further impetus to the globalization of our SPF technology.  The purchase price represents an adjusted EBITDA multiple of approximately 10 times, or approximately 7 times adjusted EBITDA, pro forma for synergies.  The combined business is now approaching $500 million in revenues and by the end of 2021 with synergies we see the SPF business exceeding $100 million in EBITDA.”  

https://ir.huntsman.com/news-releases/detail/428/huntsman-completes-the-acquisition-of-icynene-lapolla

February 19, 2020

TDI Comments–Where Have the Flywheel Profits Gone?

TDI margins hit bottom but no big rebound expected – Covestro CFO

Author: Tom Brown

2020/02/19

Dusseldorf, GERMANY (ICIS)–Toluene diisocyanate (TDI) pricing has bottomed out, at close to a record low, but there is little expectation for a rebound in the near future, according to the CFO of Germany-headquartered producer Covestro.

Demand for the polyurethane (PU) has been hit by macroeconomic weakness as well as seasonal factors at the start of the year, with pricing depressed for over a year now.

January Europe pricing fell by double-digits, with discounts of up to €90/tonne reported month on month and a range of €1,550-1,680/tonne FD (free delivered) W (west) Europe, close to a 14-year low.

“With TDI, here we really have hit bottom with margins that are probably close to a historical low,” said Covestro CFO Thomas Toepfer.

Even a lengthy maintenance shutdown for Europe’s largest TDI production facility – BASF’s Ludwigshafen, Germany, unit, which was taken offline in September – failed to significantly influence pricing, with material flowing into the region from South Korea and the US.

BASF’s TDI unit is back online, according to sources, but pricing is so low at present that it is difficult to imagine further falls, according to Toepfer.

“Some of our competitors are losing cash with every tonne they produce;b [we] believe there is not much room for prices to decline,” he said.

Despite the limited capacity for additional price falls, market conditions are such that no substantial uptick in pricing is expected in the near future, he added.

“We see overcapacity, and we don’t think anything is going to change in the near future … There is likely to be continued pressure on margins,” Topefer said.
–
–
TDI is mainly used for the production of PU flexible foams used in upholstery, mattresses and automotive seats.

https://www.icis.com/explore/resources/news/2020/02/19/10473009/tdi-margins-hit-bottom-but-no-big-rebound-expected-covestro-cfo