Clariant International Ltd. and Huntsman Corp. jointly announced Oct. 27 they have mutually terminated the proposed "merger of equals" announced in May. The decision was unanimously approved by the boards of directors of Clariant and Huntsman, based in The Woodlands, Texas.
Clariant, based in Muttenz, Switzerland, also confirmed that White Tale Holdings has increased its stake in Clariant in excess of 20 percent. This follows earlier mandatory notifications by White Tale Holdings to the Swiss Stock Exchange regarding its holdings.
In a joint statement, Peter R. Huntsman, President and CEO of Huntsman, and Hariolf Kottmann, CEO of Clariant, stated: "We remain convinced that the proposed merger of equals as agreed to on May 21, 2017, would have been in the long-term best interests of all of our shareholders. 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.
"Under these circumstances and in light of the high level of disruption and uncertainty that has been created for both companies, we have jointly decided to terminate the merger agreement. This will allow both companies to focus again fully on their respective stand-alone strategies in the best interests of the companies and their shareholders, associates, and other stakeholders. We maintain a great respect for one another, and we want to recognize and express our mutual and deep appreciation for the efforts and incredible commitment demonstrated by the associates of each company over the past several months."
“We regret the missed opportunity for value creation and thank our shareholders for their support,” said Rudolf Wehrli, Clariant chairman of the board. He said the focus will now be on further strengthening the company's market position as a globally leading specialty chemicals company — a proven strategy that would have been speeded up by the merger, but one the company is confident of continuing on its own."
The proposed merger would have created a specialty chemicals and plastics company with annual sales of around $13 billion.
Regarding the position of White Tale Holdings, Clariant's CEO commented that it was “different from ours” but that both share “a common interest in increasing Clariant's value.” He added: “That said, we will continue our dialogue with all our stakeholders.”
Peter Huntsman added: “We viewed this merger of equals as an opportunity to accelerate our downstream growth and for two great companies to become even better together. However, it is not the only option for Huntsman to create real and lasting value."
The Termination Agreement foresees no payment of a break fee on either side. Clariant will avoid paying both the $210 million deal breakage fee and the $60 million EGM nonapproval fee as foreseen in the merger agreement.