Olin Corp. "Takeaways from Meetings with Management [Erratum]" (Neutral) Spector

Research evidence excerpt

Olin Corp. "Takeaways from Meetings with Management [Erratum]" (Neutral) Spector

not participating today. Similarly, for OLN there is an ability to

upgrade that doesn't exist today. For example, a low end formulated epoxy

product may not be attractive to HUN today (lower margin, doesn't have more

upstream supply), but for OLN this would be accretive volumes and margins. This is

similar in MDI and ethyleneamines markets, where a lower cost position could

allow for more broad sales participation, spreading out fixed costs and adding

incremental EBITDA. The benefits of higher volumes and broader market

participation are not in the base cost synergies, so would be additive but not

quantified by management. From the point earlier on market growth/base

projections, it could be harder to separate these volumes/benefits in a better

market environment, but EBITDA will be higher regardless.

Management makes the point that regional competitors in MDI benefit from

chlor-alkali back integration and this combination puts the combined company on

a better competitive footing. Lower costs for formulated epoxy inputs and

ethyleneamines could also allow PF HUN/OLN to be more globally competitive in

downstream products. MDI markets are most profitable for HUN in China, US

markets are competitive but could improve w/ housing demand in time, while

Europe remains more challenged. Further asset/footprint optimization over time

remains an option, though closing sites in Europe is costly. OLN's US chlor-alkali

asset base remains cost competitive, and protected from global markets (at least

through chlorine which is regional). OLN's epoxy business will scale with HUN's

downstream business, while Winchester will remain unaffected by the

combination.