Clariant, Huntsman call off merger plans

Clariant, Huntsman call off merger plans”

Baader Helvea analyst Markus Mayer has written that a 20 percent stake would be enough to derail the deal given that only around 80 percent of Clariant shares have in the past been registered with the company, making them eligible to vote. They contended that the deal undervalues Clariant and is a "complete reversal of the company's long-standing strategy to become a pure-play specialty chemicals company".

Relenting to pressure from activist shareholders, Clariant and Huntsman Corporation have dropped their plans to combine into the world's second-largest specialty chemicals company with annual sales of some $13 billion.

Chemicals companies Clariant (Muttenz, Switzerland) and Huntsman Corp. However, they acknowledged that Clariant might not have been able to secure approval for the merger from two-thirds of its shareholders, as required under Swiss law.

Clariant and Huntsman added that the proposed merger would have been in the best interest of shareholders. White Tale's rising stake, coupled with other Clariant shareholders who came out against the deal, left the Swiss company doubtful of mustering the two-thirds support necessary for the merger to go through, added Reuters.

Clariant Chief Executive Hariolf Kottmann told reporters it was too soon for the company to discuss specific options now that the merger is off, though he said the company is well prepared to continue on its own.

Neither company will pay a breakup fee. "It both significantly destroys existing Clariant shareholder value and prevents Clariant from pursuing multiple alternative and immediate opportunities to unlock value for its shareholders".

Activist investor White Tale, which is funded by Keith Meister's Corvex hedge fund and NY investment vehicle 40 North, had been campaigning against the tie-up for months and steadily strengthened its hand by accumulating more shares in Clariant.

Clariant's shares fell about 5% today as a result of the announcement, reports Reuters.

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