International. Clariant confirmed that its board has received a letter from White Tale Holdings, the Cayman Island-based vehicle created by hedge funds Corvex and 40 North. According to the letter, White Tale has increased its stake in Clariant above 15 percent. In addition, White Tale has stated that he maintains his opposition to the merger of equals between Huntsman and Clariant.
Clariant announced that it does not agree with the statements made by White Tale in his open letter, and instead listed a number of points by which he is convinced of the merger:
- The proposed merger is a continuation of Clariant's strategy to become a global leader in specialty chemicals.
- The merger creates one of the world's largest specialty chemicals groups, with an attractive, balanced and resilient portfolio across various industrial and geographic segments, benefiting from a strong growth outlook and substantial exposure to attractive markets. Through proactive and consistent portfolio management, Huntsman's portfolio has evolved and is evolving into a specialty chemicals business and is therefore an excellent complement to Clariant.
- The terms of the proposed merger do not undervalue Clariant's shares.
- The swap ratio has been agreed on the basis of the respective share prices prevailing at the time of announcement, reflecting the proportion of historical equity value and is in line with a similarly strong track record of shareholder return of both companies in recent years. In addition, the financial equity of the exchange relationship with Clariant was confirmed with the assistance of Clariant's financial advisors.
- The proposed merger offers significant value creation to both groups of shareholders.
- In addition to the ambitious business plans of both companies, more than US$3.5 billion in value will be created through cost synergies in excess of US$400 million p.a. In addition to these cost synergies, fiscal synergies of $25 million and approximately $250 million of additional organic revenue at an EBITDA margin of approximately 20 percent will be realized through the complementary product portfolios. Moreover, strengthening common R&D platforms and projects will result in greater future potential. This substantial value creation is incomparable by any other viable alternative.
- Selling Plastics and Coatings today does not create value.
- While Clariant's Plastics and Coatings business area has been dedicated to portfolio management since 2015, selling Plastics and Coatings as Clariant today would be a destructive value in view of its significant cash contribution and cost coverage. After the consummation of the merger, the new HuntsmanClariant company will clearly have and use the increased flexibility of the expanded Group to further adjust its portfolio to maximize shareholder value and build a leading specialty chemicals company.
- Clariant has a strong record in cost management.
- Clariant has established a competitive cost structure in line with its peers despite significant R&D expenses that form the basis for sustainable future growth. Any other cost-cutting exercise will affect the company's ability to compete in the future. $300 million of improved autonomous costs as alleged by White Tale are neither sustainable nor in line with observed peer benchmarks.
- In a merger of equals, operational control is not ceded.
- The new company will be jointly led by both management teams under Swiss Corporate Governance, domiciled and based in Switzerland. Hariolf Kottmann will become President, Peter Huntsman will become CEO and Patrick Jany will become CFO of the new company. They will work together to fulfill their joint strategic vision for the merged company.
Clariant's Board of Directors further explained that after carefully and diligently studying various strategic options over the past few years, it remains deeply convinced that this combination in the form agreed in May 2017 is a perfect transaction at the right time to create substantial long-term shareholder value. It will accelerate the companies' respective trajectories towards creating a global specialty chemicals leader.
