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Activist Shareholder Sells Clariant Stake

Wednesday, January 31, 2018

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Chemical firm Saudi Basic Industries Corp (SABIC) recently purchased a 25 percent stake in specialty chemicals firm Clariant (Muttens, Switzerland), effectively ending the company’s fight with an activist holding company White Tale Holdings.

According to Bloomberg, the Cayman Islands-based holding firm announced Jan. 25 that it had sold its stake to the partly government-owned SABIC, ceasing hostilities with Clariant.

Last year, White Tale, a joint venture of New York investment firm 40 North and hedge fund Corvex Management, blocked Clariant’s $20 billion merger with Huntsman, arguing that it both undervalued the company and did not make strategic sense, noted Reuters. Clariant also rejected an independent strategic review and three seats on its board.

Deal Details

Even though SABIC has no current plans to overtake Clariant, there are other concerns given that Saudi Arabia is seeking to diversify its economy and reduce its oil dependence.

Clariant

Chemical firm Saudi Basic Industries Corp (SABIC) recently purchased a 25 percent stake in specialty chemicals firm Clariant (Muttens, Switzerland), effectively ending the company’s fight with activist investors. The move has raised some uncertainty about Clariant’s future, however.

SABIC did not release the deal’s financial details, but the stake is worth around $2.4 billion based on market capitalization, noted Reuters.

“Clariant AG is complementary to SABIC’s existing specialties business and is well in line with SABIC’s strategy of opening up new growth opportunities in specialty chemicals,” said SABIC CEO Yousef al-Benyan.

Moving forward, SABIC plans to spend $3-10 billion on acquisitions.

White Tale History

The termination of the $20 billion Clariant-Huntsman merger plan was announced in October 2017 after White Tale articulated its dissent on the merger in July and grew its stock in the company to more than 15 percent in September.

At the meeting, Clariant said that White Tale did not present its own strategy on growing Clariant’s value but instead repeated its request for the hiring of another investment bank to conduct a strategic review.

Market commentary platform Bloomberg Gadfly reported on the talks, explaining that Clariant’s current advisors are Citigroup and UBS—large banks that White Tale allegedly perceives as a conflict of interest.

However, Clariant didn’t accept that the motive for the new advisor request was this clear. Clariant’s Board of Directors unanimously rejected the idea.

About Clariant

Clariant achieved sales of 5.8 billion Swiss francs—about $6.01 billion—in 2016. Its business units include Pigments, Additives and Catalysts, as well as Masterbatches (color additives for plastics), Functional Minerals, Oil and Mining Services and Industrial & Consumer Specialties. The company was formed in 1995 as a spinoff of chemical and pharmaceutical company Sandoz.

Clariant’s offerings for the coatings industry include pigments, pigment preparations and dyes, for decorative, automotive and industrial coatings.

   

Tagged categories: Business matters; Business operations; Clariant; Huntsman

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