White Tale Holding has vowed to fight the Clariant/Huntsman merger

Chemical giant Clariant has moved to reconfirm its commitment to the planned $20 billion merger with Huntsman after White Tale Holdings increased its stake in the former to more than 15 per cent.

White Tale Holdings, a Cayman Island-based vehicle created by hedge funds Corvex and 40 North, is known to oppose the merger between Huntsman and Clariant. It wrote to Clariant’s board recently urging them to rethink the deal. The company said that the transaction has no strategic merit and is a reversal of Clariant’s publicly-stated strategy of becoming a pure-play specialty chemicals company.

The majority of Clariant’s shareholders have expressed support for the deal, with Clariant reiterating its strong strategic rationale. In a press statement, Clariant said that it does not agree with the statements made by White Tale.

A company spokesman said: “We are convinced that the proposed merger is a continuation of Clariant’s strategy of becoming a world leader in specialty chemicals. The merger creates one of the largest global specialty chemicals groups, with an attractive, balanced and resilient portfolio across diverse industry segments and geographies, benefitting from a strong growth outlook and substantial exposure to attractive markets.

“Through proactive and consistent portfolio management, Huntsman’s portfolio has evolved and is evolving into a primarily specialty chemicals businesses and is, therefore, an excellent match for Clariant.

“The terms of the proposed merger do not undervalue Clariant’s shares. On top of the ambitious business plans of both companies over $3.5bn of value will be created through cost synergies in excess of $400 million per year. In addition to these cost synergies, tax synergies of $25m and approximately $250m additional organic revenues at approximately 20 per cent EBITDA margin will be realised thanks to the complementary product portfolios.”

Clariant added that selling Plastics & Coatings today does not create value: “Whilst Clariant’s Plastics & Coatings Business Area has been earmarked for portfolio management since 2015, selling Plastic & Coatings as Clariant today would be value destructive in view of its significant cash contribution and cost coverage. Post consummation of the merger, the new company HuntsmanClariant will clearly have and use the greater flexibility of the enlarged Group to keep adjusting its portfolio to maximise value for its shareholders and build a leading specialty chemicals company.”

The new company will be jointly led by both management teams under Swiss Corporate Governance, headquartered in Switzerland. Hariolf Kottmann will become chairman, Peter Huntsman will become chief executive and Patrick Jany will become chief financial officer of the new company.