Huntsman, Clariant To Create Chemicals Giant

“This is the perfect deal at the right time,” Clariant CEO Hariolf Kottman says of the merger of equals.
Matthew HellerMay 23, 2017
Huntsman, Clariant To Create Chemicals Giant

Texas-based Huntsman Corp. and Switzerland’s Clariant AG have agreed to join forces in a merger of equals, continuing a trend of aggressive deal-making in the chemicals industry.

The combined company, to be called HuntsmanClariant, will have an enterprise value of around $20 billion and expects to generate expects about $400 million in annual cost synergies. Huntsman chemicals are used in paint, clothing and construction while Clariant makes aircraft de-icing fluids, pesticide ingredients and plastic coloring.

Under the terms of the proposed deal, Clariant shareholders would own 52% of the combined company, with Huntsman shareholders, including its eponymous founding family, owning the rest.

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“This is the perfect deal at the right time,” Clariant CEO Hariolf Kottman said in a news release. “Clariant and Huntsman are joining forces to gain much broader global reach, create more sustained innovation power and achieve new growth opportunities.”

As The New York Times reports, the chemical industry has lately been “a major source of deals, as many of its biggest names try to gain scale and reduce costs.” Other recent transactions have included deals between Dow Chemical and DuPont and Bayer and Monsanto.

“Many European companies have turned to dealmaking as growth in the chemicals industry has slowed,” Reuters noted. “European businesses have particularly suffered, losing market share to rivals in Asia, where demand is growing more quickly, or to North America, where energy is cheaper.”

Clariant was formed in the mid 1990s from parts of Switzerland’s Sandoz and Germany’s Hoechst. As part of a restructuring effort, Kottmann divested underperforming businesses including textile and paper chemicals in 2012 and has started carving out Clariant’s plastics and coatings business into a separately managed entity.

Clariant and Huntsman had previously ended tentative merger talks late last year over a disagreement about who would play the lead role. Kottmann said the proposed deal had the backing of a group of Bavarian families that own almost 14% of the Swiss company, but some analysts said Clariant might attract a higher bid.

“We think a counterbid might give higher upside for Clariant shareholders than the planned merger,” Baader Bank analyst Markus Mayer said.