Clariant to Buy Huntsman for $6.4 Billion as M&A Surges
(Bloomberg) -- Clariant AG agreed to buy Huntsman Corp. in an all-stock deal valuing the U.S. company at about $6.4 billion, extending a record run in transactions in the global chemicals industry.
Huntsman holders will get 1.2196 shares in the new company, to be called HuntsmanClariant, for each share they own, with Clariant emerging with a 52 percent stake, the two companies said in a statement on Monday. The combination is expected to generate more than $400 million in annual cost savings, leading to $3.5 billion in value creation, they said.
Clariant shares surged as much as 10 percent amid speculation the transatlantic deal could spark a counterbid for the Swiss company.
The chances another offer for Clariant emerges are “high,” given it’s the No. 1 target in the sector, a Baader Helvea analyst said in a note, adding that the planned combination with Huntsman comes across as a defensive move.
An agreement between Huntsman and Clariant adds to an already historic level of deals in the industry as CEOs seek to bolster tepid sales growth. Global chemical companies have more than $300 billion in M&A planned, according to a report by AT Kearney published in March. That level is more than twice the previous all-time high set at the end of 2015, according to the management consulting firm.
“We never felt or saw ourselves as a takeover candidate,” Hariolf Kottmann said on the call. “It would be very surprising to me if there were another company who could match or even top the value we are creating by merging these two companies together or that could tell a more convincing story to the market.”
Global Footprint
Clariant stock jumped 8.7 percent to 22.69 francs as of 12:04 p.m. in Zurich, valuing the company at 7.5 billion francs ($7.7 billion). They’ve now added 32 percent this year. Huntsman has advanced 40 percent, for a market value of $6.4 billion.
“The merger has been the subject of speculation for over a decade, we are glad that it finally came to the resolution,” Vontobel analyst Victoria Kruchevska said in a note Monday. “The merger will benefit Clariant as it will further expand its global footprint, in particular in strategically important U.S. and China markets.”
Counter Bid
Chief Executive Officer Peter Huntsman said on a call that he and counterpart Hariolf Kottmann formed a rapport over the years as each undertook a deep overhaul of their respective companies to offset heightened competition from Asia.
Since taking the helm of Clariant in 2008, Kottmann defiantly resisted the overtures of other competitors. Two years ago, it was the target of an approach from Evonik Industries AG though talks didn’t advance as Kottmann didn’t want Clariant absorbed by a Germany-based company. He said it wasn’t necessary to insist on being chief executive in this merger scenario, and talks suddenly advanced a couple of weeks ago after years of discussion.
The breakthrough came as an unparalleled wave of deals in chemicals -- including Dow Chemical Co.’s merger with DuPont Co. -- strengthened the position of competitors around Clariant and Huntsman. Rivalry in both their commodity segments such as pigments and leather chemicals, meant the companies struggled with profitability, leading to asset sales, plant closures and divestments.
The merger should strengthen earnings before interest, depreciation and amortization margins to more than 20 percent. Clariant businesses such as plastics, coatings and personal care complement Huntsman divisions such as polyurethanes and performance products.
Headquarters
The new entity’s global headquarters will be at Pratteln, Switzerland and its operational headquarters will be at The Woodlands, Texas. The stock will have dual listing on the Six Swiss Exchange and the New York Stock Exchange.
Huntsman founder and Chairman Jon Huntsman has sought a large transaction since taking the company public in 2005. Hexion Specialty Chemicals, then a unit of Apollo Management LP, agreed to buy Huntsman in July 2007 for $6.5 billion but withdrew the offer a year later amid declining chemical markets. Clariant was mentioned by analysts as a potential partner after Jon Huntsman in March said the company was considering a major deal following the separation of its paint-pigments business.
12
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- Libya's Surprise Oil Minister Change Throws Spotlight on Output
- Oil Seals Quarterly Gain in Tightening Market
- Oman Sees Increasing Ship-to-Ship Transfers of Russian Oil Bound for India
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- UK Oil Regulator Publishes New Emissions Reduction Plan
- PetroChina Posts Higher Annual Profit on Higher Production
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- McDermott Settles Reficar Dispute
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- USA Commercial Crude Oil Inventories Increase
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call
- India Halts Russia Oil Supplies From Sanctioned Tanker Giant
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Centcom, Dryad Outline Recent Moves Around Red Sea Region
- PetroChina Set to Receive Venezuelan Oil
- Czech Conglomerate to Buy Major Stake in Gasnet for $917MM
- US DOE Offers $44MM in Funding to Boost Clean Power Distribution
- Oil Settles Lower as Stronger Dollar Offsets Tighter Market
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension
- Equinor Makes Discovery in North Sea