Sep. 1--Utah's Huntsman Corp. is poised to make a $415 million bet on the future direction of the U.S. and world economies.

The maker of a variety of chemicals, which is based in Salt Lake City and The Woodlands, Texas, is offering to acquire the titanium dioxide and electrolytics businesses of bankrupt Tronox Inc.

If completed, the purchase would add $1 billion a year to Huntsman's annual revenue and about 1,000 employees. The deal includes plants in Hamilton, Miss., and the Netherlands, and a 50 percent stake in an Australian pigments venture.

"The titanium dioxide segment is struggling like most others" in the chemicals industry, said Huntsman CEO Peter Huntsman. "But we're making a bet on the future and if we are right and the economy is poised for a rebound, this could be one of the best acquisitions we've ever made."

Titanium dioxide is a chemical used as a whitening agent in such diverse products as paint, paper, plastics and cosmetics. Tronox's electrolytics business produces chemicals such as manganese dioxide for use in alkaline batteries and boron trichloride, which is used in the production of semiconductors and pharmaceuticals.

"The deal looks reasonable, assuming you get a recovery in 2010," Laurence Alexander, a New York-based analyst at Jefferies & Co., told Bloomberg News.

In a note to clients -- Alexander rates Huntsman's shares a "hold" -- he estimates the deal will add 2 cents to 3 cents per share to earnings and increase its titanium dioxide production by 76 percent to 980,000 tons a year, or 18.5 percent of global capacity.

And that would make Huntsman the second-largest producer behind Dupont, which holds 23 percent of the world's capacity, according to a research note released Monday by analyst Frank Mitsch at BB&T Capital Markets.

"A concentrated industry becomes even more so," Mitsch wrote. "Twenty years ago, the top seven suppliers accounted for 74 percent of global capacity, but if this deal goes through as planned, we estimate the top four suppliers (DuPont, Huntsman, Cristal and Kronos) will account for 70 percent."

Tronox, based in Oklahoma City, Okla., filed for bankruptcy protection in January.

Huntsman's offer of $415 million was selected by the U.S. Bankruptcy Court in the Southern District of New York as the "stalking horse bid" -- or the offer that will be held up as the one to top when Tronox's assets are auctioned off in the fourth quarter.

steve@sltrib.com

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