Olin and Huntsman Merger Expected to Generate Significant Synergies
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 hours ago
0mins
Source: seekingalpha
- Merger Drivers: The merger between Olin and Huntsman is primarily driven by vertical integration and cost-saving opportunities rather than expansion into new markets, with analysts noting that this move could create significant value by linking Huntsman's polyurethane and epoxy businesses with Olin's chlor-alkali operations.
- Cost Synergy Expectations: The companies anticipate achieving $300 million in annual cost savings by the end of the third year post-merger, with an additional $100 million opportunity available after the expiration of an Olin supply contract in 2031, highlighting the financial potential of the merger.
- Shareholder Structure: Under the agreement, Huntsman shareholders will receive 0.5476 Olin shares for each Huntsman share they own, resulting in Olin shareholders owning approximately 54.5% and Huntsman shareholders 45.5% of the combined entity, which will impact the shareholder structure of both companies.
- Future Cash Flow Outlook: The combined company is expected to generate between $300 million and $600 million in annual free cash flow in 2027 and 2028, allowing leverage to decline by roughly one turn per year when combined with expected earnings growth, indicating a healthy long-term financial outlook for the merger.
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Analyst Views on OLN
Wall Street analysts forecast OLN stock price to rise
11 Analyst Rating
3 Buy
7 Hold
1 Sell
Hold
Current: 23.810
Low
20.00
Averages
24.00
High
30.00
Current: 23.810
Low
20.00
Averages
24.00
High
30.00
About OLN
Olin Corporation is a vertically integrated global manufacturer and distributor of chemical products and a United States manufacturer of ammunition. It operates through three segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. The Epoxy segment produces and sells a full range of epoxy materials and precursors, including aromatics (acetone and phenol), allyl chloride, epichlorohydrin, liquid epoxy resins, solid epoxy resins and formulated solutions products such as converted epoxy resins and additives. The Winchester segment produces and sells sporting ammunition, reloading components, small caliber military ammunition and components, industrial cartridges and clay targets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Olin and Huntsman Merger Expected to Generate Significant Synergies
- Merger Drivers: The merger between Olin and Huntsman is primarily driven by vertical integration and cost-saving opportunities rather than expansion into new markets, with analysts noting that this move could create significant value by linking Huntsman's polyurethane and epoxy businesses with Olin's chlor-alkali operations.
- Cost Synergy Expectations: The companies anticipate achieving $300 million in annual cost savings by the end of the third year post-merger, with an additional $100 million opportunity available after the expiration of an Olin supply contract in 2031, highlighting the financial potential of the merger.
- Shareholder Structure: Under the agreement, Huntsman shareholders will receive 0.5476 Olin shares for each Huntsman share they own, resulting in Olin shareholders owning approximately 54.5% and Huntsman shareholders 45.5% of the combined entity, which will impact the shareholder structure of both companies.
- Future Cash Flow Outlook: The combined company is expected to generate between $300 million and $600 million in annual free cash flow in 2027 and 2028, allowing leverage to decline by roughly one turn per year when combined with expected earnings growth, indicating a healthy long-term financial outlook for the merger.
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- Shareholder Equity Distribution: Under the agreement, Huntsman shareholders will receive 0.5476 Olin shares for each Huntsman share, resulting in Olin shareholders owning approximately 54.5% and Huntsman shareholders about 45.5% of the combined entity, which will impact future shareholder dynamics.
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- Shareholder Equity Distribution: Huntsman shareholders will receive 0.5476 Olin shares for each Huntsman share, resulting in Olin shareholders holding a 54.5% stake in the merged entity, ensuring their controlling interest.
- Management Structure: The new company will be led by Olin's current CEO Ken Lane, while Huntsman's CEO Peter Huntsman will serve as non-executive chairman, ensuring balanced representation from both companies at the executive level.
- Cost Savings and Tax Benefits: The merger is expected to achieve over $400 million in cost savings within the first two years and generate $125 million in cash tax benefits, further enhancing the financial health of the combined entity.
See More
Olin and Huntsman Merger Expected to Generate Significant Synergies
- Merger Drivers: The merger between Olin and Huntsman is primarily driven by vertical integration and cost-saving opportunities rather than expansion into new markets, with analysts noting that this move could create significant value by linking Huntsman's polyurethane and epoxy businesses with Olin's chlor-alkali operations.
- Cost Synergy Expectations: The companies anticipate achieving $300 million in annual cost savings by the end of the third year post-merger, with an additional $100 million opportunity available after the expiration of an Olin supply contract in 2031, highlighting the financial potential of the merger.
- Shareholder Structure: Under the agreement, Huntsman shareholders will receive 0.5476 Olin shares for each Huntsman share they own, resulting in Olin shareholders owning approximately 54.5% and Huntsman shareholders 45.5% of the combined entity, which will impact the shareholder structure of both companies.
- Future Cash Flow Outlook: The combined company is expected to generate between $300 million and $600 million in annual free cash flow in 2027 and 2028, allowing leverage to decline by roughly one turn per year when combined with expected earnings growth, indicating a healthy long-term financial outlook for the merger.
See More
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- Dow Jones Surge: The Dow Jones index rises today, reflecting optimistic market sentiment regarding economic recovery, which may attract more investors to traditional sector stocks.
- Nasdaq Pullback: In contrast to the Dow's rise, the Nasdaq index experiences a pullback, indicating volatility in tech stocks, prompting investors to cautiously assess the short-term performance of technology shares.
- SpaceX Stock Spike: SpaceX shares soar significantly, likely due to the company's recent successful launches and positive market expectations, further solidifying its leadership position in the aerospace industry.
- Medical Stock Breakout: A medical company's stock shows strong performance, breaking through key technical levels, which may draw more investor attention to potential growth opportunities in the healthcare sector.
See More
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- Investigation Focus: Halper Sadeh LLC is investigating Open Lending Corporation (NASDAQ:LPRO) regarding its sale to ANV Group Holdings Ltd. at $3.15 per share, which may infringe on shareholder rights.
- Merger Transaction: In the merger between Huntsman Corporation (NYSE:HUN) and Olin Corporation, Huntsman shareholders will receive 0.5476 shares of Olin for each share of Huntsman, with Halper Sadeh LLC potentially seeking increased compensation.
- Olin Shareholder Rights: Upon completion of the merger, Olin shareholders will own approximately 54.5% of the combined entity, and Halper Sadeh LLC encourages Olin shareholders to understand their rights and options.
- TruBridge Sale: TruBridge, Inc. (NASDAQ:TBRG) is being sold to Inventurus Knowledge Solutions, Inc. for $26.25 in cash per share, and Halper Sadeh LLC reminds TruBridge shareholders to be aware of their legal rights and options.
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- Southwest Airlines Stock Surge: Southwest Airlines shares rose almost 4% after Jefferies raised its price target from $37 to $44, although the new target still indicates a 4.5% downside from Monday's close, reflecting optimistic sentiment regarding the airline industry's recovery.
- Gildan's Stock Plunge: Gildan's stock plummeted about 24% following a negative report from Jehoshaphat Research, which claimed the company's
See More
Olin and Huntsman Announce Merger Agreement
- Merger Overview: Olin Corp. and Huntsman Corp. have announced an all-stock merger agreement to create a combined company valued at over $12 billion, although Huntsman's stock fell 8.78% in pre-market trading, indicating initial market skepticism about the merger.
- Shareholder Equity Distribution: Under the agreement, Huntsman shareholders will receive 0.5476 Olin shares for each Huntsman share, resulting in Olin shareholders owning approximately 54.5% and Huntsman shareholders about 45.5% of the combined entity, which will impact future shareholder dynamics.
- Expected Synergies: The merged company anticipates over $400 million in total identified cost synergies, with more than $300 million expected within 24 months and all synergies projected to be realized by the end of year three, significantly enhancing profitability and competitive positioning.
- Management Structure: Olin's current CEO Ken Lane will lead the new company as CEO, while Huntsman's chairman Peter Huntsman will serve as non-executive chairman, ensuring balanced leadership and collaboration between the two firms.
See More
Huntsman and Olin Merger Details Revealed
- Merger Overview: Huntsman and Olin announced an all-stock merger, with the combined company projected to exceed $12 billion in annual revenue by 2025, showcasing a strong synergy in the North American specialty chemicals sector.
- Shareholder Equity Distribution: Huntsman shareholders will receive 0.5476 Olin shares for each Huntsman share, resulting in Olin shareholders holding a 54.5% stake in the merged entity, ensuring their controlling interest.
- Management Structure: The new company will be led by Olin's current CEO Ken Lane, while Huntsman's CEO Peter Huntsman will serve as non-executive chairman, ensuring balanced representation from both companies at the executive level.
- Cost Savings and Tax Benefits: The merger is expected to achieve over $400 million in cost savings within the first two years and generate $125 million in cash tax benefits, further enhancing the financial health of the combined entity.
See More
