S8 Capital wants to buy the assets of the American Huntsman in the Russian Federation
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As Kommersant learned, S8 Capital of Armen Sargsyan wants to acquire the Russian business of the American Huntsman. This company owns a chemical production facility in Obninsk. Huntsman hoped to exit its assets in the Russian Federation in 2023, but did not receive all the necessary regulatory approvals. S8 has already become one of the largest tire manufacturers in Russia by acquiring the factories of Continental and Bridgestone that left the country, as well as the domestic Cordiant, and began producing auto components by purchasing a number of local assets of Bosch. According to analysts, the amount of the deal with Huntsman could be 2.1–2.5 billion rubles.
S8 Capital has agreed to acquire the Russian business of the American chemical company Huntsman, sources told Kommersant. Huntsman owns the Huntsman-NMG plant in Obninsk in the Russian Federation, which produces polyurethane products for the construction, automotive, pipe, shoe industries, as well as the Huntsman CIS trade. According to Kommersant’s sources, the deal was concluded last year, but is still not closed because it has not received all regulatory approvals. S8 did not respond to Kommersant’s request.
FAS reported to Kommersant that the service decided to satisfy the requests of Industry Investments JSC to acquire 100% of the shares of Huntsman CIS LLC and Huntsman-NMG JSC. According to the department, the deal will not lead to restriction of competition in the market for the wholesale trade of chemical products and the production of paints and varnishes.
JSC Industry Investments was registered in February 2023, the beneficiary is not disclosed. S8 Capital is a diversified holding of Armen Sargsyan, the main asset before the mass departure of foreign companies was the largest distributor of state lotteries Stoloto.
In 2022, S8 acquired the local assets of the elevator manufacturer Otis, which was leaving the Russian Federation; a year later, the company’s portfolio in this area was replenished with the business of the Finnish Kone. Over the past year, the scale of S8’s business has expanded significantly, replenished with the assets of foreign tire manufacturers leaving the Russian Federation – the Japanese Bridgestone and the German Continental, as well as through the purchase of the Russian company Cordiant. Thanks to these acquisitions, S8 became the second player in the tire market in terms of capacity after Tatneft with the Ikon Tires plant. The company also acquired Bosch’s auto components business in the Saratov region.
Huntsman was founded in California in 1970 by Jon Huntsman, whose son, his full namesake, is the former US Ambassador to Russia. Huntsman’s business took off thanks to the invention of the Big Mac clamshell container for McDonald’s Corporation. This idea is still in demand in other fast food restaurants.
In its reporting for the third quarter of 2023, Huntsman announced that it had signed an agreement in September to sell assets in the Russian Federation to a third party and hoped to exit this business by the end of the year. The company pointed out the uncertainty in the timing of completing its exit from the Russian business due to the need to obtain permission from the authorities of the US, EU and Russia.
On the scale of Huntsman, its business in the Russian Federation is small: the consolidated revenue of the entire corporation in the world reaches $8 billion. Revenue of Huntsman-NMG according to RAS at the end of 2022 amounted to 7.3 billion rubles, net profit – about 530 million rubles. In addition to Obninsk, the company has representative offices in Togliatti, Moscow, St. Petersburg, Rostov-on-Don, Novosibirsk and Chelyabinsk.
At the moment, there has been no news about the suspension of production at the Russian Huntsman plant, notes Advance Capital research analyst Pavel Terentyev, although production volumes have been reduced. In his opinion, it is advisable to evaluate the company’s Russian assets through the EBITDA proxy indicator, based on sales profit for 2022. Since for Huntsman-NMG this figure is 840 million rubles, then, using the average current multiplier for transactions related to the departure of foreign companies from the Russian market, at the level of 2.5x–3x EV/EBITDA, we can assume that the transaction amount amounted to 2.1–2.5 billion rubles.
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