Clariant Tries Friendly Persuasion on Huntsman Vote

28.08.2017 -

With the countdown running to a November vote by Clariant shareholders on management’s plan to merge with US peer Huntsman, the Swiss group’s CEO Hariolf Kottmann is seen to be pulling out all stops to push the deal through, over opposition from the two activist shareholders behind the acquisition vehicle White Tale.

The all-share transaction would create a new company with annual sales of $13 billion and an enterprise value of $20 million, but some Clariant shareholders, led by White Tale, believe they could come up short, despite the Muttenz-based specialty chemicals producer owning a 52% controlling stake.

One of prime challenges will be to persuade a large number of shareholders to attend the extraordinary meeting to vote on the fusion plans, as a low turnout would threaten Kottmann’s chances of gaining approval.  One way of boosting attendance could be announcing the date of the vote sooner than legally required, to allow more time to reach out to small retail shareholders, a source told the news agency Bloomberg. 

The merger partners have already engaged investment bank Goldman Sachs to help fight off the challenge from White Tale’s owners, the hedge funds Corvex Management and 40 North, which together hold a stake exceeding 10%. They have also formed a steering committee of company managers to review the merger plans.

Clariant must win more than two-thirds of votes cast on relevant agenda items in order to move ahead with its plans, Bloomberg notes, while pointing out that attendance at investor meetings has been dwindling, with only 53.6% of share capital represented at its 2017 annual general meeting.

The activist investors have urged Clariant’s management to “fully explore all the strategic options” to merging with Huntsman, which they believe was not “seriously” done before inking up the deal.

The former owners of Süd Chemie – who sold the Munich-based chemical company to Clariant in 2011 and together hold an estimated 14% stake – are supporting the Muttenz management.

Huntsman and Clariant have identified at least $400 million in annual cost savings that they say could be fully in place by the end of 2019, potentially creating $3.5 billion in value for investors.