In a deal aimed at meeting the strategic directives of both specialty chemical providers, Huntsman (NYSE:HUN) has entered into an agreement to acquire the combined titanium dioxide (TiO2) and performance additives businesses of Rockwood Holdings (UNKNOWN:ROC.DL) for a combined $1.325 billion in cash and assumed debt, Huntsman and Rockwood announced today.

Of the $1.325 billion purchase price, Huntsman will pay $1.1 billion in cash for Rockwood's pigments, timber chemical treatment, water chemistry, titanium dioxide pigments, and thermoplastics compounding businesses, in addition to assuming $225 million in unfunded pension obligations, according to Huntsman's statement.

Products from the Rockwood businesses are used in construction, plastics, inks, food, and cosmetics, among other areas. Huntsman said the deal will make it the second-largest global producer of TiO2 and inorganic color pigments.

Rockwood Chairman and CEO Seifi Ghasemi was quoted as saying, "With the sale of these businesses, we have successfully completed, ahead of schedule, all of our key objectives for 2013."

As with Rockwood, the acquisition is also in line with Huntsman's strategic plans, as President and CEO Peter Huntsman said in a statement, "With this combination we will be better positioned to serve customers through a broader product range including color pigments, functional additives and specialty TiO2 pigments."

The transaction should be immediately accretive for Huntsman, by as much as $0.60 per share annually beginning in 2014. Huntsman also noted in its statement that it expects $130 million in cost savings from the acquisition.

The deal is subject to regulatory and customary closing conditions, and is expected to be completed the first half of 2014. Huntsman plans to pursue a public offering of the newly combined pigments business within two years of the deal's completion.

-- Material from The Associated Press was used in this report.