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Chemical company Huntsman Corporation (HUN - Snapshot Report) has agreed to buy privately-held specialty urethane polyols maker Oxid L.P. for an undisclosed price.

Tex.-based Oxid, which has annual sales of $86 million, makes specialty chemical products for the urethane industry. The entity markets its diverse product line of specialty polyols under the Terol moniker and distributes products globally from its manufacturing plant in Houston.

Polyols made by Oxid represent a major component in the manufacturing of energy saving polyurethane insulation products used in residential and commercial construction. They are integrated with methylene diphenyl diisocyanate (MDI) to create polyurethane foam insulation for a range of applications. Huntsman's Polyurethanes division is a leading producer of MDI-based polyurethanes.

The acquisition, which is expected to consummate during the third quarter, is expected to be immediately accretive to Huntsman's earnings. The addition of Oxid’s Terol specialty polyols to Huntsman's MDI product range will enhance the latter’s offerings to the key downstream insulation markets in North America and usher in fresh opportunities globally.   

With the U.S. housing and construction markets gathering steam, Huntsman seeks to leverage the significant benefits of MDI polyurethanes insulation. Oxid acquisition is expected to reinforce its position and offer healthy market and technology synergies.

Huntsman, which has annual sales of more than $11 billion, makes differentiated chemicals. Its makes products for an array of industries including chemicals, plastics, automotive, aviation, textiles, paints and coatings, construction, technology, agriculture, health care, appliances and packaging.

Huntsman, in Mar 2013, bought a 20% stake in Japan-based spray polyurethane foam insulation company Nippon Aqua Co. Ltd. Nippon Aqua is the market leader in spray polyurethane foam insulation in Japan. Huntsman supplies a number of advanced MDI-based polyurethanes systems to Nippon Aqua.

The investment in Nippon Aqua will allow Huntsman to address the significant need for more effective insulation in Japan following the Fukushima Daiichi nuclear plant disaster in 2011.

Huntsman currently carries a short-term (1 to 3 months) Zacks Rank #4 (Sell).

Other companies in the chemical space having favorable Zacks Rank include Arkema S.A. (ARKAY), Cytec Industries Inc. (CYT - Snapshot Report) and PPG Industries Inc. (PPG - Analyst Report). All of them retain a Zacks Rank #2 (Buy).

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