A shareholder revolt led by activist investor Keith Meister has torpedoed the proposed $20 billion merger of plastics and rubber maker Huntsman with Swiss specialty chemicals group Clariant.
The demise of the deal came after White Tale Holdings, a company created by Meister and the investment fund 40 North, acquired control of 20% of Clariant’s shares. White Tale argued that the merger had no strategic merit and significantly undervalued Clariant.
The agreement, announced in May, would have given Clariant 52% of the combined entity and created the world’s second-biggest specialty chemicals maker behind Germany’s Evonik.
“We remain convinced that the proposed merger of equals … would have been in the long-term best interests of all of our shareholders,” the companies’ chief executives said Friday in a news release.
“However, given the continued accumulation of Clariant shares by activist investor White Tale Holdings and its opposition to the transaction, which is now supported by some other shareholders, we believe that there is simply too much uncertainty as to whether Clariant will be able to secure the two-thirds shareholder approval that is required to approve the transaction under Swiss law,” they added.
Clariant CEO Hariolf Kottmann acknowledged that White Tale had won the backing of other Clariant shareholders. “We got the impression that White Tale and, let me say, some buddies and friends, were, or are, in control of more than just 20 percent or 22 percent,” he told reporters.
White Tale began its public campaign against the merger in July when it disclosed a 7.2% stake in Clariant. 40 North is the investment arm of roofing maker Standard Industries.
According to The Financial Times, White Tale’s “success in blocking the deal is a high water mark for U.S. activist investors, which have increasingly turned their attention to European companies.” Among other Swiss companies targeted by U.S. activists is Nestlé, in which Daniel Loeb, head of Third Point, has disclosed a 1.25% stake worth $3.5 billion.
Kottman, however, complained that activist funds are interested only in maximizing the value of their holdings and quit once their targets have been achieved.