Group enlarges merger obstacle
The activist investor group opposing the $15 billion merger of The Woodlands chemical company Huntsman Corp. with its Swiss competitor Clariant has upped its ownership stake again, raising the hurdle for the deal to come to fruition.
White Tale Holdings — a partnership of New York investment firms Corvex Management and 40 North — boosted its holdings in Clariant to more than 15 percent of the shares, increasing its stake from more than 10 percent. The coalition is now Clariant’s biggest shareholder.
The effort to block the merger is led by Corvex’s founder, Keith Meister, a protégé of famed corporate raider Carl Icahn. In a letter to Clariant’s board of directors, Meister wrote that he remains “increasingly” convinced that the combination would dilute Clariant’s value. He has spoken in favor of Clariant focusing on its strengths in specialty chemicals, cutting costs and selling off other pieces of its business.
The merger proposed in May would create the world’s second-largest specialty chemical company, HuntsmanClariant. Both companies on Tuesday reiterated their commitment to completing the deal.
Clariant said that the vast majority of its shareholders have expressed their support. Clariant’s second-largest investor, a group of Bavarian families, supports the deal. Simply selling assets and cutting costs would hurt the Clariant’s long-term prospects, the company said.
In a statement Tuesday, Huntsman Corp. CEO Peter Huntsman called White Tale’s attack on the deal and
Huntsman’s value as “selfserving attempt to derail our strategic merger of equals with Clariant.”
“In an apparent effort to engineer a short-term rise in the Clariant stock price,” Huntsman said, “White Tale has advanced a destructive high-risk strategy of dismantling Clariant and denying all other stakeholders of the company the sustainable, longterm benefits of this compelling combination.”
Huntsman added that he has not met with Meister and his group and would not do so.
“Their activism is all about the short-term breakup value of Clariant and is not about Huntsman,” the CEO said.
Huntsman and Meister have a history. Meister, whose hedge fund once held a sizable stake in Huntsman Corp., opposed the company’s 2014 purchase of more than $1 billion in titanium dioxide plants that make pigments. The deal went through but proved ill-timed as the pigments sector fell deeper into a downturn from which it only recently recovered.
Huntsman recently spun off its pigments business into the publicly traded Venator Materials. Venator’s initial public offering raised $454 million at $20 a share. Huntsman retained a nearly 80 percent ownership stake in Venator after the IPO, but the goal is to sell off its stake entirely over the next two or three years.
In a recent interview in Switzerland, Huntsman brushed off Meister’s efforts to derail the merger, referring to a meeting they had about the acquisition of the pigments business.
“His ranting irritated me,” Huntsman said in the interview, according to a filing with the Securities and Exchange Commission. “That is why I declined when he recently wanted to see me again.”
Peter Huntsman would become the CEO of the combined company, with Clariant chief Hariolf Kottmann as the chairman. Huntsman’s father, Jon Sr., who founded the Huntsman company, would become chairman emeritus. The deal, which would give Clariant 52 percent of the combined company, is scheduled to close by year-end.
The headquarters of the combined company would be Clariant’s hometown of Pratteln, Switzerland, in part for tax purposes. The Woodlands would become the North American headquarters.
Clariant and Huntsman Corp. have argued that the merger would not only cut costs and yield hundreds of million of dollars in savings, it would also create a company large enough to compete in an industry that is beginning to consolidate into bigger and bigger players.
“Without the necessary size, it is difficult to hold your own against the best Chinese and Indian manufacturers,” Huntsman said in the Swiss interview. “There is a real risk of being crushed by the competition.”
Corvex was founded by Meister in 2010. In another energy sector feud, Meister and another activist resigned from the board of directors of pipeline giant Williams Cos. after failing to oust the Williams CEO.