Greetings and welcome to the Huntsman Corporation Sale of Chemical Intermediates and Surfactants Businesses conference call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Ivan Marcuse. Thank you, Ivan. You may begin.
Thanks, Jackie. Thank you everyone for joining this morning. The purpose of this call is to discuss the agreement to sell our chemical intermediates and surfactants business to Indorama Ventures. We announced this agreement yesterday after the market closed via press release and posted it to our website, huntsman.com. We also posted a set of slides to our website, which we will reference on the call this morning. Joining us on the call today are Peter Huntsman, Chairman, President, and CEO, and Sean Douglas, Executive Vice President and CFO. During the call, we may make statements about our projections or expectations for the future. All such statements are forward-looking statements, and while they reflect our current expectations, they involve risks and uncertainties and are not guarantees of future performance.
You should review our filings with the SEC for more information regarding the factors that could cause actual results to differ materially from these projections or expectations. We do not plan on publicly updating or revising any forward-looking statements during the quarter. We will also refer to non-GAAP financial measures such as adjusted EBITDA, adjusted net income, and free cash flow. You can find reconciliations to the most directly comparable GAAP financial measures in our earnings release that's posted on the website, huntsman.com. I will now turn over the call to Peter Huntsman, our Chairman, President, and CEO.
Thank you very much, Ivan. Good morning, everyone. Thank you for taking the time to join us. Please turn to the slides we posted on our website. Last night marked another significant milestone for Huntsman as we announced the sale of our chemical intermediate business, which includes our North American PO, MTBE assets, our integrated oxides and glycol facilities, and our global surfactants business to Indorama Ventures for $2 billion of cash and $76 million of assumed net underfunded pension obligations. On an LTM basis, this represents an EBITDA multiple of eight times when including about $30 million of retained SG&A costs. When excluding these costs, which we will address over time, the multiple is closer to an LTM EBITDA of nine times. We view this as a fair price and reflective of the quality of the assets and the talented workforce that operate the businesses.
We've stated over the past few years, our goal is to allocate more of our resources into more stable, differentiated, and complementary downstream businesses. The majority of the assets that we've agreed to sell are more upstream and capital intensive. This monetization is going to provide us the flexibility to more aggressively focus additional resources such as research and development and commercial development to our downstream businesses and to invest in and acquire assets that are more stable and cash generative, consistent with our long-term strategy. The businesses that we are selling encompass five separate facilities, including Port Neches, Texas, Dayton, Texas, Chocolate Bayou, Texas, Ankleshwar, India, and Botany, Australia. After the close, our core business will have approximately $100 million less expenditures for capitalized maintenance, including $50 million less maintenance capital expenditures and $50 million less scheduled turnaround maintenance spend.
Earnings associated with these assets will be treated as held for sale and reported as discontinued operations starting in the third quarter of this year. This transaction is subject to standard regulatory approvals and customary closing conditions and is expected to close near year-end. There are no financing conditions. Turn to slide number six. After the completion of this transaction, we will have net debt leverage of under one time. We will continue our balanced approach to capital allocation. Our financial priorities will be as follows. Number one, maintain an investment-grade rating and strong balance sheet. Number two, continue paying a competitive dividend. Number three, invest in low risk, high return organic growth projects within our existing product portfolio.
An example of this is our ongoing investment in constructing a new splitter at our Geismar, Louisiana facility that will allow us to upgrade 150 million pounds of crude MDI for higher value downstream applications. Number 4, pursue value creating acquisitions that are downstream or complementary to our existing businesses. Number 5, continue repurchasing shares of Huntsman opportunistically. After closing, we intend to use a portion of the proceeds to accelerate our share repurchases under our existing $1 billion authorization, which has approximately $600 million still remaining. Let me share a few comments about our recent guidance. We do not believe that the transaction materially alters our guidance we shared last week. We will continue to target 40% free cash flow to EBITDA going forward. As we sit here today, I repeat as I said a week ago, that we are always a tweet away from further market volatility.
The events of this past week certainly evidence that. Operator, at this time, we'd like to open the line up for questions and comments.
Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Your first question comes from Aleksey Yefremov. Please go ahead.
Just curious if you have a specific target or transaction in mind when you were making this divestment? Should we take it as a sign that something is imminent on the purchase side?
No. Aleksey, thanks for the question. I think that as we look at this, do we have a specific acquisition target? No, we do not. Have we looked at various targets that we see? Yes, we do. I think in the past, I've been quite vocal that I think asset prices are a bit higher than they should be, and I think that we're probably seeing a moderation in some of those asset prices. I think, again, going over what I just talked about our number 1 priority being a strong balance sheet. Before we go after any particular asset that might put any strain on the balance sheet, we want to make sure that we've got the proper cash and proper strength to do that. I wouldn't say at this time that there is a single asset that we have in our sights.
Thank you, Peter. Could you just comment on anything, describe if anything prompted this transaction specifically? Were you shopping this business around, or did Indorama approach you? How did this transpire?
We were approached by a third party some time ago, some months ago. It was not Indorama. Over the course of a couple of months after we saw the value of the company that had approached us, we spoke to quite a few strategic players and people who we thought might be interested in this and I would say ran something of a process. It wasn't a formal open process, but certainly something that I'd consider to be a private process of companies that are already in this space or had a desire to get in this space. I think that we had a good global series of companies that expressed some interest.
I think that, again, going back on comments that I've made over the last year and a half, it is the focus of this company and will remain the focus of this company to continuously look at opportunities where we can differentiate ourselves. If we are producing products, of which we really bring no technical, no global, no ability to upstream or up-value those products, I think that we will continue to look throughout our portfolio for those sort of products and assess the value of those internally. Obviously, if we find somebody that has a higher value on those assets than we do, we'll continue to look at our portfolio.
Thank you, Peter.
Thank you. Your next question comes from Frank Mitsch with Fermium Research. Please go ahead.
Hey, good morning, and congratulations. Very nice multiple. Can you talk about your integration? Obviously, propylene oxide was pretty important on the polyurethanes side of things. Can you talk about how do you view your competitive position in the Polyurethanes business following this transaction?
Yeah. Thanks, Frank, and good morning. Good to hear your voice. We've been selling propylene oxide, obviously, for 25, almost 30 years, since we brought the Port Neches propylene oxide facility up. I think it's safe to say that we believe that we have a very competitive multi-year contract in place that will satisfy our needs. I will be very clear on this because I read about somebody in a write-up earlier this morning questioning if we may have given a sweetheart deal to the buyer that would have elevated the purchase price on propylene oxide or on ethylene oxide. I would say that on both of those, we consider those to be vital raw materials. We will not disadvantage, we have not disadvantaged our urethanes or our Advanced Materials business going forward with a sweetheart deal.
I think that as we look at Indorama's ability to operate these facilities and the people and the skill sets that they are acquiring here, we feel that we're going to be in a very competitive position going forward. They'll have a great customer in us, and we'll have a great supplier in them, and we'll be competitive.
All right. That's helpful. Of course, I paid attention when you were listing your priority uses of cash, and you mentioned maintain a competitive dividend. Frankly, 3.6% is more than competitive. There's not a chance that you're going to cut the dividend, correct?
That we cut the dividend? I hope that the dividend as a percentage of the value of the stock gets cut. No, we have no intention of cutting the dividend. I'd like to see the percentage drop because the stock goes up.
Terrific. Thank you.
Thank you.
Thank you. Your next question comes from James Sheehan with SunTrust Robinson Humphrey. Please go ahead.
Morning. Thanks again and congratulations, Peter.
Thank you. I'd love to take credit for it, but it was certainly a team effort.
Do you consider the remainder of the Performance Products business to be core? Also when you look at businesses that are downstream, like Advanced Materials, very high value, could probably fetch a much higher multiple if you were to sell it and you're not getting sufficient credit for it in your current multiple. How do you think about the portfolio going forward after this deal?
Well, I'm hopeful that our downstream businesses like Advanced Materials and what we're seeing in those businesses is exactly where we want to be taking this business on a longer term basis, and that the multiple ought to be more reflective of that. I think that as we look at our multiple and what percentage of our multiple of our EBITDA is downstream urethanes and downstream epoxies and so forth, I think that that percentage of the overall portfolio has now just risen quite dramatically. We have just sold off essentially 5 billion pounds of production, that I think is very valuable production and is very good production. I don't mean to disparage it at all, but I think that it does dilute the downstream businesses when you have as much MTBE, propylene oxide, ethylene oxide, glycols, so forth, that we're producing.
I think that that does take some of the glow away. I would hope that if anything, we're going to have a greater focus on our downstream businesses and that the multiple or the value of the EBITDA that is being generated by this company will be enhanced because those businesses will become more dependent on those businesses. As far as the amines business, the first part of your question about the remaining pieces of Performance Products, I see the amines business is fitting in very well, particularly with our Polyurethanes business. Amines go into urethane catalysts, a lot of the formulations and so forth in our downstream Polyurethanes and MDI businesses. I think that there's a very good fit there. I look at our maleic anhydride business. This has been a business that's generated well in excess of 20% EBITDA margins for the last couple of years.
We're a global leader in technology and catalysts and a low-cost producer globally. We just bought in two weeks ago, the 50% interest of our German joint venture we had with Sasol, I think at a very competitive price, somewhere just under five times EBITDA, for a business that we think will just solidify our global leadership in maleic anhydride. I think that's a very core business to us. As I look at those two remaining pieces of Performance Products, yes, I think they are very core business to us.
All right. You mentioned stranded costs. You can eliminate a portion of those. How much of the stranded costs are you targeting right now, and how quickly can you reduce those?
Well, we will have transitional agreements here over the course of the next six plus months in IT and so forth. Obviously, we've got to provide services and so forth. Indorama is not just buying a great series of assets here, but they're also expanding their North American footprint considerably. As we have an opportunity here to cut back on some of those transitional services and so forth, we will continue to look internally as to where and how we can best manage those costs. I also would just note that some of those costs are just simply costs that are embedded with the overall business. If we're selling off 20% of the business, you don't sell off 20% of your board of directors, necessarily your IT costs, your tax costs, and so forth. Some of those costs are going to stay.
Some of them will be eliminated, and others of them, frankly, we'd like to put a large percentage of this capital into play to be able to further expand our business. These costs will also be used to accomplish synergies in acquisitions going forward. I think when we look at that, I don't want to say that we're going to take $30 million and X dollars will be cut by this date. I think it'll really be a combination of how quickly we're able to transition the business out, how quickly we're able to acquire and assimilate further acquisitions, and also some of those embedded costs are just going to remain with us.
Thank you very much.
Thank you.
Thank you. Your next question comes from Matthew Blair with Tudor, Pickering, Holt & Co. Please go ahead.
Hey, good morning, Peter. Congrats on the deal. I was hoping, could you just clarify the LTM free cash flow yield of Or sorry, total free cash flow of these businesses that you sold? We have the 260 of EBITDA, and then I think you mentioned roughly $100 million of spending. Would the free cash flow be roughly $160 million?
Matthew, this is Sean Douglas. Thanks for the question. We haven't provided you an LTM free cash flow for this business. We'll be doing that as we move forward. In the third quarter, we'll be pulling this out as a discontinued op, and you'll get some clarity around that. Generally speaking, this business has similar properties of free cash flow, as does the business we'll manage going forward. The benefit Huntsman will have going forward is really the volatility. This business is a business that does incur some large multi-year turnarounds that are lumpy in terms of cash. What you'll see going forward is still this roughly the 40% target Peter alluded to in his commentary. You'll see a little bit less volatility as we go forward. I don't see the cash profile of this business changing material.
Your estimate right now, I'm not going to disagree with, but at this stage, we're just not giving that LTM sort of nature on the cash position until we report on the next call.
Sounds good. Slide six mentions the use of proceeds will include some organic growth initiatives. You're obviously working on the MDI splitter now. Just curious if you have any other major organic projects in the hopper.
At this time, we have underway three or four downstream system houses that we're in the process of building and equipping. As we look at our maleic anhydride, recent acquisition of our maleic anhydride, our polyester polyols, we continue to expand those areas as well. We have the capability now as a company to probably be going out here soon on some public advertising of recycling upwards of 1 billion bottles a year of PET, spent PET bottles, and converting that into polyester polyols that will be going into the spray foam applications. We also have a Chinese system house that's under construction at this point in North China. I think as we look at that downstream business, a lot of these are smaller, $10-plus million sort of investments.
I think that one of the crucial decisions, I don't mean to wander here, but I think one of the crucial decisions that went behind this sale was when we looked at our capital allocation this past year. We had some very strong projects in surfactants that we could have done. Frankly, as we look at wanting to stay at that 40% cash generation to EBITDA, and we look at the capital needs and the CapEx and so forth of the company, do we want to be putting our money into surfactants? These are great projects, by the way.
Moving more and more into specialty surfactants and intermediate surfactants, if you will, do we want to put more of our CapEx into downstream amines and urethanes and our, we think, is a very exciting pipeline in our epoxy resins and prepregs and so forth. When you start diverting money away from good projects into your intermediates and kind of your base business, that's when you start to see that maybe this business probably would be more valuable in someone else's hands who are going to take those projects and run with them, that have excellent return on those projects. Sorry to ramble there on the question, I think when we start looking at capital allocation, we want to make sure that we're feeding that downstream differentiated end of our business.
Very helpful. Thank you.
Thank you. Your next question comes from Jeff Zekauskas with J.P. Morgan. Please go ahead.
Good morning. It's Silke Kuk for Jeff. The remaining share repurchase is about like $600 million. Do you think you can complete all of that after you receive the cash at the end of the year? Do you think you'll be done by the end of the first quarter 2020?
Well, I'd be surprised if we were to do all of that amount in the first quarter of 2020. Look, on our share repurchases, we have a program in place, as we've explained to the market. We have a program in place that will be buying shares between now and closing. Right? I think that once we have closed, once we have that cash, as we look at the market, as we look at conditions today and so forth, I think that we are going to be more aggressive after we close and after we have the cash in hand. We'll be more aggressive than we otherwise would have been in share repurchases. Now, I want to be absolutely clear. As we get to the time of closing, hypothetically, let's say that it's January 1. I think at that time, we've also got to look at our share price.
We've got to look at it relative to our peers, multiples and so forth. We've got to look at the overall macroeconomic situation. If we're in the middle, which I don't foresee happening, but if we are in the middle of a Lehman type of a 2008, 2009 meltdown. Cash is king. I think we'll probably be wanting to preserve the cash and taking a pretty conservative view on liquidity. As we see the stock price as it is today and so forth, I think it's a very attractive price, and I think that we would want to be buying in shares more aggressively. I think I would be painting myself in a corner if I were to say that five months from now, this is the amount of money that we're going to spend under these conditions, under this multiple, with economic conditions as they are today.
No, our intention is, once we get the cash, to even more aggressively be buying in shares relative to what we've been doing.
Okay. That's helpful. Secondly, will any of your Chinese joint ventures be part of this divestiture?
No. They're completely separate, and our joint venture that we have with Sinopec will remain with our Polyurethanes division, and that will not be affected by this at all.
Okay. Thanks very much.
Thank you.
Thank you. Your next question comes from John Roberts with UBS. Please go ahead.
Thank you, congrats as well. Does it make sense to integrate the maleic anhydride business downstream into polyester alkyd resins, given that's still a pretty capital. One of the attractiveness of this deal is the reducing the capital intensity, but that's going to be probably your most capital-intensive business, I would guess.
Well, to date, our maleic business has been one of our least capital businesses in generating about a 75% ratio to EBITDA. John, at this point, over the course of the next quarter or two, between now and the end of the year, we will be operating our Performance Products division as we're operating it today. We'll be operating it as an upstream surfactants, maleic and amines business here over the next six months. I wouldn't be surprised if near the time of closing, that we'll make more specific comments around exactly how we will be managing the amines and the maleic business. For the time being, we'll continue to operate it as is. Again, as we look at maleic, I certainly would see that over time evolving into an opportunity where we can further derivatize and add value to that business.
Great. Thank you.
Thank you. Your next question comes from Hassan Ahmed with Alembic Global. Please go ahead.
Morning, Peter.
Morning, Hassan. How are you?
Very well, thank you. Congratulations on the deal.
Thanks.
Peter, just wanted to get a better sense of the inorganic opportunities. Obviously, balance sheet as clean as clean can be, particularly post the deal. Just wanted to get a sense. Will the inorganic opportunities you look at primarily be within the polyurethane space? If I sort of think through that, will they be primarily within polyurethanes and complementary businesses that you have within the portfolio post the deal? Would you also venture out looking into other differentiated businesses that you're not into right now?
Well, I think that just because of the size, the chemistry and the global reach that we have in polyurethanes, I think that that's probably going to be a very large area of opportunity, and it has been in the past. I want to be absolutely clear here. We do not have limits in saying that we are going to not invest in this area or invest more in this area. Okay, let me correct that. We will not be getting into polystyrene and styrene monomers. We were 40 years ago.
As I look in downstream urethanes, one area of our business I think that probably gets a little bit under-noticed is our Advanced Materials and the opportunity that we have in pushing some of the chemistry and some of the opportunities that we see in the market into our downstream epoxies and, again, the product pipeline that we have there. I don't know if I'd be interested in an entirely new leg of our business here. As I look at things like coatings and adhesives, as I look at our elastomers businesses, and I look at the overlap that that has within our company and what certain acquisitions in those three areas particularly would be able to fill some of the void between what I see as our downstream epoxies, urethanes, and our amines businesses, and to some degree, even maleic in some of those downstream applications.
I see a lot of opportunity down there. At the end of the day, Hassan, as you know, we're opportunists, we'll also go where the opportunity best exists for us to create value.
Understood. Very clear. As a follow-up, maybe this is sort of more a question for Indorama, but since I'm sure you spent a fair bit of time with them and had multiple discussions with them. Obviously, the macro is what the macro is. There's clearly some uncertainty there. As I sort of heard about this deal yesterday, to me, my first knee-jerk was, look, there is an Asian company that's coming out here buying assets in the U.S. First and foremost, the upstream cost advantage is very alive and very well, particularly relative to the Asian side of things, right? From their perspective, obviously you guys got a great multiple, but from their perspective, in one clean swoop, they can sort of expand their network within North America quite markedly, right.
The question really that I'm getting to is that, as you had discussions with them, obviously you guys got a good multiple, but from their perspective, did it also come down to a very attractive sort of balance of sort of buy versus build? Why take on the execution risk? Why sort of sit there and maybe potentially have cost overruns if they were to build things out when you can buy assets, which are high-quality upstream assets, and straight away get the cost advantage here in North America? Again, I know this is more tailored to Indorama, but just wanted to whatever you could share with me about your discussions with them because I'm sure these things came up.
Well, yeah. We've not had a great deal of interaction with Indorama. Matter of fact, I wasn't very familiar with the company as of a couple of months ago. Aloke Lohia, their Chairman, CEO, my counterpart there, we've become very close through this process, and it would be really wrong for somebody to think that there is a winner or loser in this transaction. I look at what they are doing. They're expanding into the U.S. markets. They're expanding into a low-cost energy platform into the largest most vibrant economy in the world right now. I think they're picking up excellent assets.
As I talked earlier, there are some wonderful projects here to invest in the surfactants and intermediates businesses that we have today that I think Indorama, I can't speak for them, but I would imagine it would give very strong consideration into investing and expanding on some of these platforms that they have. You show me a single project in the Gulf Coast that's been built that has been a grassroots facility construction project that has come in ahead of schedule or under budget and the uncertainty that that brings. I think Indorama's got a great business here, and they've got a great path going forward here focused on where they want to be focused. I think they've got a great business. I think we've got a great opportunity to redeploy capital, and I see this as really a win-win.
Fantastic. Super. Thanks so much, Peter.
Thank you.
Thank you. Your next question comes from Arun Viswanathan with RBC Capital Markets. Please go ahead.
Great. Thanks. Good morning. Just wanted to understand how the company looks a little bit next year on an earnings power basis. You indicated that this doesn't really materially affect your guidance for this year. As you look out into next year, obviously your EBITDA is going to come down. Could you help us understand maybe the D&A associated with this business or the potential for lower interest expense as you go into next year?
Yeah, I think that we'd really like to be able to talk about that on our third quarter call. As we look at these core businesses, as I look at the core Polyurethanes business, particularly at the downstream business, I see that as a business growing at greater than twice the rate of GDP. Our Performance Products, the remaining parts of that maleic and amines are both kind of two times GDP sort of growth businesses. Advanced Materials. If you look at the core, again, I keep shining the spotlight back to Advanced Materials, if you look over the last two years, three years, we've been exiting the commodity end of that business, and we've been building the aerospace downstream differentiated end of that business. When you look at the core of that business, it continues to grow at greater than about two times GDP as well.
Textile Effects, again, this is an industry that has grown at GDP, but I think that our segment of Textile Effects, even though we see a bit of volatility right now in the supply chain, supply and demand and inventory levels for Textile Effects right now. Over time, over the last couple of years our environmentally sensitive applications and higher-end applications in Textile Effects has certainly had that business, not only its volumes, but also its earnings growing at about twice the rate of GDP. As I look across these businesses, they ought to be generating, I would say again, I'm looking at 2020 onwards. They ought to be generating a greater than 40%, sort of a free cash flow to EBITDA. It ought to be growing at least one and a half to two times GDP.
We ought to be looking at margins across the board that are going to be in the high teens pushing to 20% over the course of the next year or so. We've got an opportunity to further invest and acquire and so forth to build these businesses out. Again, I think we'd like to get into more detail in our third quarter earnings call on that as we talk about more specificity around cash flow and so forth. As I look out over kind of the next two to three years on a macro basis, we feel very good about this core and it's a great foundation to build on.
Okay. Thank you.
Arun, you asked a question about interest expense or debt. I would just say that there's a little bit of pre-payable debt that we can play around with when this happens. Call it about $400 million of pre-payable debt, but the rest of it's pretty cost inhibitive.
I think we've stated that we would prefer to keep our multiple net leverage of, call it two times, roughly, as we go forward. There's no intent to really take out some of those long-term notes as we close on this transaction.
Okay, that's helpful. Just as a quick follow-up, maybe you can just give me your thoughts on potentially accelerating share repurchases, and reiterate your thoughts there, basically. Would you want to accelerate those in order to offset any dilution that could happen from this transaction? Thanks.
Yes. Again, I think as we look at the time of closing and as I look five months down the road here, I think that we need to carefully assess where the macroeconomy is. We need to carefully assess where our share price is and where it is relative to others, what I would consider to be our peers in the industry. Again, I think that if our economic conditions are anything like they are today, the outlook's anything like it is today, and our multiple's anything like it is today, really relative to our peers, I think we will be aggressively looking at share buybacks.
Thanks.
Thank you. Your next question comes from Neel Kumar with Morgan Stanley. Please go ahead.
Great, thanks. It looks like that LTM EBITDA for the divested businesses has fallen close to 30% year-over-year. I know you gave a couple of years of pro forma financials, but I was just curious if you had a sense of the through-cycle EBITDA for the businesses, just over a longer-term horizon.
Are you talking about the business that's sold or the business that remains?
The businesses that are sold.
I don't think we've published that out there for many people to see. We have an LTM EBITDA of about $260, a fiscal year of about $300. Think of that 2018 number of probably a more cycle average EBITDA. Other than that, we haven't given you more detail historically.
That's helpful. Just as a follow-up, the businesses you sold had slightly higher margins than the consolidated business. Is there anything you can do to maybe offset the slight margin dilution for the deal?
Yeah. We can look at controlling the retained SG&A that we have, focusing on getting the products that are in our pipeline out into the market and raising prices and looking at both the expansion of downstream manufacturing opportunities and smart acquisitions that enhance our cash flow and our margins. I do just want to say something, though, as I mentioned about acquisitions. I don't feel that we as a company have to go out and do something that is aggressive or rather reckless on the acquisition front. I don't feel that we need to be out to prove that we can spend as quickly as we can sell. I think that we're going to take a very prudent approach to acquisition opportunities.
I think that we need to make sure that, well, I've stated in the past that we want to make sure there's an opportunity for synergies, that it's going to be very quickly, if not immediately, accretive, and that it makes a great deal of sense. It took us years to get to this point where we have the balance sheet that we have, and I think that we need to be very smart with it. I don't want people coming away from this call thinking that next week we're going to be announcing a big acquisition or something of that nature.
I think we need to be very smart and very prudent with this. That might mean that if we're heading into a global recession here in the next couple of quarters, maybe that's the time to preserve your capital and also wait for asset prices to cool down a little bit. Sorry about the rambling comment here, but I think it's important. I don't want people to come away thinking that we feel compelled to go out and buy something just because we have the cash here.
Great. Appreciate the color.
Thank you.
Thank you. The next question comes from P.J. Juvekar with Citi. Please go ahead.
Hi, good morning. This is Eric Petrie on for P.J.
Morning.
If I recall correctly, I think the surfactants business sale in Europe to Innospec was done above nine times. Curious your thoughts as to why the lower multiple with the integration and U.S. feedstock advantage?
Well, I think that when you look at the overall multiple on well, look, I think that as we look at Europe, this is nine times. Europe was about nine and a half times or so. I think they're both about the same. Europe was just a completely different, it was smaller, it was more focused into surfactants. It didn't include a lot of the glycols and oxides and olefins and a completely different animal, if you will. I think looking back on it, that was the right divestiture at the right time. I think this is the right one at the right time. I think that, yes, I think that there's a segment of what we're selling here that's a small %.
That certainly is a minority of the overall volume that would be somewhat kind of complementary to what we did in Europe, but totally different size and totally different portfolio.
I would just add, if you treat stranded costs, retained costs equally on an apples-to-apples basis, multiples are pretty much similar.
Okay, thanks for that color. Peter, you've always been active on the M&A side with your acquisition of Rockwood, TiO2 pigments business, Clariant's merger. With this deal, do you think you've become more attractive or less attractive in a potentially strategic deal going forward?
Good question. Just my personal opinion, I think we've probably become more attractive for opportunity. I think that whenever you've got a balance sheet that we have, and you've got greater downstream focus and so forth, as we have, a portfolio that is perhaps a little bit leaner and more focused, simplicity does, I think, matter. Yeah. I would say that this certainly would open the doors to any number of opportunities for us.
Great. Thank you.
Thank you. Operator, I think we'll take one more question here. We're cognizant of people's times and competing interests.
Thank you. The last question comes from Michael Leithead from Barclays. Please go ahead.
Thanks. Good morning. Congrats, Peter, on the transaction. I guess, going back to one of the earlier questions on the genesis of the deal, was the mix of divested businesses a reflection of what the original third party wanted to purchase? I guess, how did you decide the exact business split you were going to divest? It's a bit of different intermediate assets in the combination here.
Well, the original interest was specifically around our Port Neches facility. As you look at ways you potentially could carve out PO/MTBE, or if you look at the overall facility, it became very evident to us, and has been for some time, that if you sell the majority of the Port Neches site, you sell the entire site, because it's so interwoven with each other. If you're going to do that, you look at where are you taking the ancillary facilities that complement this, and you very rapidly come to a conclusion of the locations in India, Australia, even though they're not physically or even a supply chain attached to Port Neches. The end products, customers, applications, technologies, know-how, chemistry, are all very similar. I think that it comes up with a very clean package here.
Yeah, I think when we were approached initially by a third party, it really encompassed all of what we have today.
Got it. That's super helpful color. When you gave updated guidance last week, what were you assuming for EBITDA contribution of these businesses in 2019?
Well, I'm not sure that we broke that out at the time of the call. I would say again, that as we look at 2019, the guidance that we gave around our Performance Products business pretty much, I think, related to these. We've seen a little bit of weakness in the glycols business. I think that we've seen fairly robust and fairly strong margins, consistent margins the last couple of months here on MTBE. I think we called that out in our call. I think we continue to stand by that.
Got it. Thank you.
Thank you.
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