Huntsman Defeats Starboard’s Board Nominees; Shares Down 11%

Shares of Huntsman Corporation (HUN) dropped by 11% on Friday, after the company released the preliminary vote results of the annual election of its Board of Directors.

All five nominees for activist hedge fund investor Starboard Value LP, which owns around 8.8% of Huntsman, lost the election. The stock dive probably indicates that shareholders are unhappy with the outcome.

Huntsman engages in the manufacturing of chemicals for the plastics, automotive, and construction industries. Its shares have gained 28.7% over the past year.

Starboard Loses Board Seats

During Huntsman’s 2022 Annual Meeting of Stockholders, the shareholders re-elected all of its ten director nominees to its Board. Meanwhile, none of Starboard’s nominees won seats.

Starboard has been hounding Huntsman to improve its stock and financial performance and has alleged that the Board is captive to CEO Peter Huntsman. After losing the vote in the preliminary results, Starboard reminded Huntsman of all the promises it had made to its shareholders.

Huntsman has vowed to return $1 billion in share buybacks by 2023, spend less than $500 million on any single acquisition, and improve its earnings before interest tax depreciation and amortization (EBITDA) margins. The company has also promised to undertake a strategic review of its non-core Textile Effects business.

Official Comments

While Chairman, President, and CEO of HUN, Peter Huntsman is happy with the outcome, he did appreciate all the constructive dialog with Starboard and stated that the company looks forward to Starboard’s continued engagement as a “significant investor”.

“The outcome of today’s shareholder vote is validation of our portfolio strategy and recognition that the Huntsman of today is vastly different than the Huntsman of five years ago,” Huntsman added.

Meanwhile, disgruntled with the outcome, Starboard CEO Jeffrey Smith pointed out that preliminary results indicate that less than 50% of the outstanding shares supported the vote.

Smith further stated, “We hope that the Board recognizes that this clearly shows that shareholders not only expect management to fulfill its promises, but also expect the Board to hold management accountable for these promises.”

“While we may not be on the Board, rest assured that we will be watching with great interest,” Smith concluded.

Consensus View

Overall, the HUN stock commands a Strong Buy consensus rating based on 11 Buys and three Holds. The average Huntsman price target of $47.31 implies 31.5% upside potential to current levels.

Stock Investors

Notably, TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Positive on Huntsman, with 13.5% of portfolios tracked by TipRanks increasing their exposure to HUN stock over the past 30 days.

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