Clariant, Huntsman abandon plans for $20bn merger

Swiss chemicals group Clariant and US rival Huntsman Corp have abandoned a planned $20bn merger after opposition by an activist investor group that included Keith Meister’s Corvex hedge fund.

White Tale Holdings, which is composed of Corvex and a fund called 40 North, had built up a 20 per cent stake in Clariant. It had argued the tie up had no strategic merit and significantly undervalued the Swiss company.

On Friday, Clariant’s chief executive Hariolf Kottmann and Huntsman boss Peter Huntsman admitted in a joint statement that there was “simply too much uncertainty” over whether shareholder approval could be obtained.
 They added: “In light of the high level of disruption and uncertainty that has been created for both companies, we have jointly decided to terminate the merger agreement. The companies also acknowledged that White Tale’s position was “now supported by some other shareholders”

White Tale began its public campaign against the merger in July when it disclosed a 7.2 per cent holding.

Last month, Clariant had reiterated its commitment to the merger, which it said was “the best value creating option for all stakeholders”.

But Clariant needed to win approval of the deal from two-thirds of those shareholders who attend a general meeting, which was expected to be held in the coming months. Given that not all shareholders attend such meetings, White Tale could have almost certainly have blocked a deal with its 20 per cent stake.

In August, Mr Huntsman, the US group’s founder, told the Swiss newspaper NZZ am Sonntag that he had met between 150 and 200 Clariant shareholders. “The large majority are behind us,” he said.

In its letter last month, White Tale claimed the Huntsman deal would mark a shift in strategy and lead Clariant to change from a pure-play specialty chemicals company to an “unfocused and commodity-oriented business with increased volatility and a lower market multiple”.

It alleged that Clariant’s board has not “seriously explored alternative measures or transactions to maximise shareholder value in advance of agreeing to merge with Huntsman”.

White Tale also argued that much of the synergies from a Huntsman deal could be achieved through a “robust cost optimisation plan” at Clariant without having to give almost half of that value to Huntsman shareholders.