When Swiss specialty chemicals maker Clariant announced its $6.4 billion takeover of Texas-based Huntsman Corp. in May, the deal was touted as a “merger of equals.” But a group of activist investors are now pressuring Clariant to back off the deal and explore other options.
According to a report in Bloomberg, the investors, Corvex Management and 40 North, own 7.2 percent of Clariant.
In an emailed statement, the investors wrote, “We believe the proposed merger significantly undervalues Clariant’s shares and that far more value could be created for shareholders through any number of alternative transactions…The proposed merger has no strategic rationale and is in fact a complete reversal of the company’s longstanding strategy of becoming a pure-play specialty chemicals company.”
The companies are hoping to sew up the deal by the end of this year. If merged, the newly formed company will have a market value of about $13.8 billion.
There’s little overlap between the two companies. Huntsman scored big about 40 years ago when it began making “clamshell” plastic containers for McDonald’s Big Macs. The company now focuses on other plastics, foams, composite materials and other specialty chemicals.
Clariant specializes in care chemicals, catalysis, natural resources, and plastics and coatings.
Despite the lack of synergies, executives from both companies contend that the merger will unlock $400 million in annual savings by the end of 2019 and create up to $3.5 billion in value for investors.
Yet, Corvex and 40 North argue that Clariant did not fully explore its strategic options before agreeing to merge with Huntsman.
In an emailed statement, Clariant said it is maintaining an “open dialogue” with the investors about the deal.