Huntsman and Clariant agree $20bn merger

Michele Maatouk Sharecast | 22 May, 2017 08:32 - Updated: 13:59 | | |

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Swiss and US chemicals groups Clariant and Huntsman Corp have agreed to a merger of equals that would create a company worth around $20bn.

The deal will create a specialty chemical company with sales of around $13.2bn and an adjusted EBITDA of $2.3bn. Under the terms of the transaction, which is due to close by the end of the year, Clariant shareholders will own around 52% of the new entity, while Huntsman investors will own the rest, based on their current values.

Clariant’s chief executive officer Hariolf Kottmann said: “This is the perfect deal at the right time. Clariant and Huntsman are joining forces to gain much broader global reach, create more sustained innovation power and achieve new growth opportunities. This is in the best interest of all of our stakeholders. Peter Huntsman and I share the same strategic vision and I look forward to working with him.”

The Huntsman CEO, meanwhile, said: “I could not be more enthusiastic about this merger and look forward to working closely with Hariolf Kottmann, a man I have admired and trusted for the past decade. We also look forward to a close association with his immensely talented colleagues around the world. Together, we will create a global leader in specialty chemicals with a combined balance sheet providing substantial financial strength and flexibility.”

The combined company is expected to realise more than $3.5bn of value creation from approximately $400m in annual cost synergies and the full synergy run-rate will be achieved within two years of closing. These synergies will be realised by reducing operational costs and improving procurement.

The targeted synergies represent roughly 3% of total combined 2016 revenue with one-time costs up to $500m.

Olivetree Financial said the combination makes sense and continues a theme of consolidation and rationalisation of the chemicals space. “It comes as no surprise to see Clariant executing on a merger of equals, it has needed to participate in a major deal for some time, yet management have been steadfast in their refusal to either stretch its balance sheet or to sell the company. A MoE structure was always likely, and in Huntsman it has a partner who brings it the potential to aggressively cut costs whilst creating a NewCo with a nicely balanced geographical exposure.”

At 0828 BST, Clariant shares were up 6.8% to CHF22.29.

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