26 May 2017

Clariant to buy Huntsman

Clariant is acquiring Huntsman in an all-stock transaction worth an estimated USD 6,251 million. If the merger goes through it will create a chemical giant with an enterprise value of about USD 20,000 million, according to the press releases of both companies.

The takeover came amid a wave of consolidation in the industry, which has put pressure on Clariant and Huntsman’s profits as their rivals grow stronger, Bloomberg reported. Perhaps one of the most talked about mergers in the chemical sector is the USD 61,695 million amalgamation between Dow Chemical and DuPont, which is due to close no later than September this year. Faced with increasing competition, Clariant and Huntsman have moved to shed assets and closed factories, according to the news provider.

According to Zephyr, the M&A database published by Bureau van Dijk, Clariant most recently sold its insurance unit Clariant Insurance to Randall & Quilter in January this year. It also offloaded its energy storage business in Switzerland to Johnson Matthey in 2015.

Similarly, Huntsman disposed of its personal and home care products manufacturing businesses in Belgium, Spain and France to Innospec in a deal worth about USD 225.00 million last December. It also agreed in 2014 to transfer its ink-grade chemical manufacturing business to Lomon Billions (then known as Henan Billions) for about USD 10.00 million.

Clariant is paying USD 26.08 per share, representing a 2.4 per cent discount to Huntsman’s close on 19th May, the last day prior to the bid being announced. The combined entity will be named HuntsmanClariant, of which 52.0 per cent will be held by Clariant, with Huntsman controlling the remaining 48.0 per cent. As HuntsmanClariant will inherit the listing statuses of both companies, its shares will trade on the SIX Swiss and the New York stock exchanges.  

The transaction almost fell apart last year when both parties disagreed over the ownership of the combined group, as reported by Reuters. While the boards of Clariant and Huntsman have now given the green light, the transaction remains subject to regulatory and shareholder approvals.

Clariant’s chief executive Hariolf Kottmann said: “Clariant and Huntsman are joining forces to gain much broader global reach, create more sustained innovation power and achieve new growth opportunities.” Huntsman’s chief executive Peter R Huntsman also commented: “Together, we will create a global leader in specialty chemicals with a combined balance sheet providing substantial financial strength and flexibility.”

The acquiror has appointed Citigroup and UBS as financial advisors, while Bank of American and Moelis & Company are assisting Huntsman.

According to Zephyr, there have been 13,851 announced or competed deals targeting chemical manufacturers worldwide since 2014, with the largest being the USD 70,500 million amalgamation between Actavis and Allergan.

© Zephyr