Clariant, Huntsman reject call to cancel their merger

Swiss chemical maker Clariant AG and U.S.-based Huntsman Corporation have reconfirmed their intention to merge in replying to an open letter from Clariant’s largest stakeholder criticizing the $20 billion deal.

In an open letter to Clariant dated Sept. 19, Cayman Islands-based investment firm White Tale Holdings asked Clariant to reconsider the merger as it lacked “strategic merit.”

“Unfortunately, we remain convinced, and increasingly so, that the proposed merger is detrimental to Clariant shareholders,” White Tale said in the letter. “It both significantly destroys existing Clariant shareholder value and prevents Clariant from pursuing multiple alternative and immediate opportunities to unlock value for its shareholders.”

On the same day, White Tale also increased its stake in Clariant to more than 15 per cent, making it the biggest stakeholder in the company.

Clariant responded to the letter by reaffirming that its board is determined to go ahead with the deal. “The planned merger is the best value-creating option for all stakeholders…and [we] will, therefore, not deviate from the binding agreement,” Clariant said in a Sept. 19 statement.

On Sept. 20, Huntsman weighed in, saying that White Tale was seeking to prevent the deal in order to make a quick profit. “White Tale has advanced a destructive, high-risk strategy of dismantling Clariant and denying all other stakeholders of the company the sustainable, long-term benefits of this compelling combination,” Huntsman CEO Peter Huntsman, who is due to become the combined company’s CEO, said in a statement. “[White Tale’s] activism is all about the short-term, break-up value of Clariant”.

The merger between Clariant and Huntsman was announced in May, and will create a specialty chemicals and plastics company with annual sales of around $13 billion.

The deal is scheduled to be completed by the end of 2017.