Olin: An Unlikely Partnership

Research evidence excerpt

Olin: An Unlikely Partnership

ted

(1-212) 270-4584

EBITDA versus a 10-year average of 5.6x, and Huntsman was trading at 11.4x aaron.rosenthal@jpmorgan.com

versus an average of 7.3x. Markets, in our opinion, are probably less willing to

Elle Boyd

capitalize proposed cost reductions because small movements in commodity (1-212) 270-7283

prices can neutralize the economic effects of the efficiencies. For example, a elle.boyd@jpmchase.com

$20/t change in ECU prices would probably alter EBITDA by ~$100m. J.P. Morgan Securities LLC

• We rate Olin and Huntsman Neutral. We seem to be entering a period of

negative momentum in commodity prices generally and PVC prices in Quarterly Forecasts (FYE Dec)

particular with the opening of the Strait of Hormuz. There is no clear downward Adj. EPS ($)

direction to interest rates and there may be some upward pressure. Our rough 2025A 2026E 2027E

math suggests that the combined company is trading at 7.2x for 2027 and 6.3x Q1 0.04 (0.67)A

Q2 0.04 0.03

for 2028. We think that the FCF yield is about 5% for 2027 and 9% for 2028. Q3 0.39 0.16

Each multiple point turn is worth $6.50/sh, and we think there is about as much Q4 (0.63) (0.27)

chance of Olin trading $3/share higher to $26 as there is for the company FY (0.15) (0.75) 0.35

trading $3 lower to $20.

Style Exposure

• Huntsman and Olin have agreed to an all-stock merger transaction:

Huntsman shareholders are to receive 0.5476 shares of Olin for each Huntsman

share. Olin shareholders will own 54.5% of the company post-transaction and

Huntsman shareholders 45.5%. Ken Lane, the CEO of Olin, will become CEO

of OlinHuntsman. Peter Huntsman, the CEO of Huntsman, will become Board

Chair of the new company. Phil Lister, the CFO of Huntsman, will become

CFO of the new entity.