Texaco plans to sell most of its chemical operations It wants to focus on oil, gas business

September 14, 1993|By New York Times News Service

DALLAS -- Texaco Inc. has agreed to sell its Texaco Chemical Co. and almost all its worldwide chemical operations to a joint venture controlled by two billionaires, Jon M. Huntsman of Utah and Kerry Packer of Australia, for $1.06 billion, the two parties said yesterday.

Texaco said the sale would allow it to focus on its core oil and gas business.

The deal would be the largest in a series of acquisitions that Mr. Huntsman has made since 1982 to build his closely held #F Huntsman Financial Corp. into one of the nation's top family-owned businesses.

It would also propel an affiliated company, Huntsman Chemical of Salt Lake City, into the ranks of the nation's 10 largest chemical companies. Huntsman Chemical is the nation's largest private chemical company.

Mr. Huntsman said in a telephone interview that a "huge chunk of equity" would finance the transaction and that about 55 percent of the purchase price would come from bank financing. He declined to disclose how much he and Mr. Packer were personally contributing.

Mr. Packer, one of the wealthiest people in Australia, owns Consolidated Press Holdings, a privately held television, publishing and consumer promotion company in Sydney.

Ralph S. Cunningham, president of Texaco Chemical of Houston, will be the president of the joint venture, to be called Huntsman Corp.

The deal was announced after the close of the stock market yesterday. Earlier, Texaco shares closed at $65.375, down 75 cents on the New York Stock Exchange.

The acquisition, analysts said, will be one of the largest recent transactions in the chemical industry, which is in a downturn.

"They're obviously trying to be opportunistic," said Harvey S. Stober, a chemical industry analyst at Dean Witter.

Mr. Huntsman, 55, said he and Mr. Packer planned to make other acquisitions in the chemical industry, betting that the slump is close to hitting bottom. In June, they formed a joint venture to purchase the Chemplex petrochemical operation in Melbourne, Australia.

Alfred C. DeCrane Jr., Texaco's chairman and chief executive, said in a statement that the sale was an "important further step" in Texaco's program to focus on oil and gas.

He said proceeds from the transaction would be used to speed up investment in North Sea projects, enhanced oil recovery and natural gas development in the United States, exploration opportunities in Asia and the Gulf of Mexico and marketing operations.

Mr. Huntsman said the acquisition was "strategically critical" to the Huntsman Companies because it would complement its product line. Huntsman Chemical makes polystyrene and other resins used to make toys, appliances, television cabinets, drinking cups, disposable medical goods and other products. The company is expected to report $1.85 billion in revenues this year.

Texaco Chemical manufactures commodity and specialty chemicals at six plants in the United States, Canada, Belgium, Britain, Brazil and Colombia. It employs about 2,600 people.

Texaco Chemical had 1992 worldwide revenues of $1.5 billion, ++ compared with $37.6 billion for Texaco. The chemical unit lost $7 million in the second quarter, compared with earnings of $2 million a year earlier.

Texaco will keep its two chemical operations at refineries in El Dorado, Kan., and Delaware City, Del.

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