Huntsman's 'Show Me' Summer: A $400M Merger Bet Against a Soft Macro Tape
The Olin merger dominates a call where MDI supply is balanced, demand is anemic, and the stock has already given back 27% since peaking on the eve of the announcement.
HUN · Earnings Call · 2026-07-31
The Olin Merger: 1 + 1 = 3, or a Show Me State?
Peter Huntsman arrived at his Q2 2026 call with one message above all others: judge the Olin merger by results, not promises. For a CEO who usually spends earnings calls parsing benzene curves and MDI operating rates, the pivot to sell-side was striking. The June 16 merger-of-equals with Olin is the defining event of his tenure, and he spent his opening remarks — and much of the Q&A — defending its logic.
Let's remember that chlorine and that the entire line of raw materials that we are presently buying from chlorine to caustic to epi to LER to EDC. This is the only major supply chain that every single 1 of the divisions within Huntsman consumes today.
The synergy math he laid out: roughly $75M in purchasing and logistics, $75M in epoxy and overlap integration, and $150M in SG&A — a $300M bucket he insists was built bottom-up, not by a consultant "picking 5%" of revenue. On top sits a "plus $100M" from replacing the external chlorine supply contract (which runs to end-2030) with internal supply. He framed the prize explicitly: the combined savings could create value "roughly standalone Olin today, the value of a standalone Huntsman or Olin." That is a bold claim — cost synergy promises layered onto “the $300 million of synergies plus another $100 million that is the replacement.” — Peter R. Huntsman, Chairman, CEO, and President · 2026-07-31
The market, however, is skeptical. HUN peaked at $15.89 on June 15 — the eve of the announcement — and has since shed roughly 27% over 90 days, its steepest drawdown since the 2022 trough. For a stock already down more than 75% from its February 2022 high, the fade is telling: investors appear to be taking the "show me" posture Huntsman himself invoked. The whole-history tape is one long descent — a company still searching for its footing.
Balanced Supply, Listless Demand
The macro backdrop hardly helps. On MDI, management was candid: supply is "pretty well balanced" — a large global plant sits “on the wrong side of the Strait of Hormuz... representing somewhere around 4% of the industry average” — Peter R. Huntsman, Chairman, CEO, and President · 2026-07-31 — but demand growth is stuck in "0% to 2% very low single digits." North American housing has softened, Chinese consumer confidence continues to languish, and Europe's energy policy is once again the swing factor:
“over the last 2 or 3 weeks here... I have seen gas in Europe go from about $13, $14 per MMBT rise above $20 per MMBtu.” — Peter R. Huntsman, Chairman, CEO, and President · 2026-07-31
This is a recurring pain, not a new one. On the May 2026 call, management described a Europe finally approaching positive EBITDA with tentative green shoots; today it is still hoping Europe stays positive even as energy threatens to spiral. The prior quarter's optimism has curdled into watchfulness. It is telling that a year of promised price increases has yet to translate into real pricing power — back in May, Huntsman conceded “we have not seen a quarter-on-quarter growth in price trends since 2022,” — Peter R. Huntsman, Chairman, CEO and President · 2026-05-01 and back in February, the optimism was of the same restrained kind: “We see price increases that have been announced across the board.” — Peter R. Huntsman, Chairman, CEO and President · 2026-02-18 Meanwhile, the antidumping duties on U.S. MDI — a theme from quarters past — are dismissed as a tailwind that "will play out over a multi quarter basis" and needs demand to return before it matters.
The bright spots are real, and the company's own keyword trajectory confirms the pivot: new high-momentum terms this quarter are all merger- and materials-led — day 1 readiness, cost synergies, wide-body build rates — rather than the tariff and Red Sea themes driving the broader tape. Spray foam is growing low double digits — "hitting on all cylinders" — and Advanced Materials grew 8% in the quarter, led by power grid, aerospace adhesives, and new EV applications ahead of GDP. The equity (PO/MTBE) JV in China, a drag for years, is now flat quarter to quarter.
The Numbers Under the Hood
The financial reality beneath the merger story is a deep trough. The latest quarter shows operating income of -$29M and net income of -$53M on ~$1.4B of revenue; gross margin sits at 12.9%, down 1.4pp year over year. Effective net cash stands at -$2.1B, though management notes leverage improved to 5.4x from 6.1x and points to "more towards that sort of 4 times net debt leverage ratio" by year end. The S-4 documents cite ~$500M of 2027 EBITDA — a level that implies a mid-single-digit multiple on the combined company only if the synergies actually land.
Perhaps the most telling line of the call came when Huntsman was asked what the investment community is missing. His answer, in essence: nothing, until we prove it. "Show me" is the right frame. The merger is the most consequential strategic move this company has made in years — and the tape suggests the market is waiting for evidence, not promises.