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Clari­ant and Hunts­man to Com­bine in Mer­ger of Equals

29.05.2017
Clari­ant [IBB net­work mem­ber: Clari­ant Produkte (Deutsch­land) GmbH] and Hunts­man Cor­por­a­tion announced last week that their Boards of Dir­ect­ors unan­im­ously approved a defin­it­ive agree­ment to com­bine in a mer­ger of equals through an all-stock trans­ac­tion. The merged com­pany will be named Hunts­man­Clari­ant. On a pro forma 2016 basis, the com­bin­a­tion of both com­pan­ies will cre­ate a lead­ing glob­al spe­cialty chem­ic­al com­pany with sales of approx­im­ately $13.2 bil­lion, an adjus­ted EBITDA of $2.3 bil­lion and a com­bined enter­prise value of approx­im­ately $20 bil­lion at announce­ment. The com­bined entity will bene­fit from each other’s strengths. It will have a sig­ni­fic­antly improved growth pro­file in highly attract­ive end mar­kets and geo­graph­ies. Hunts­man­Clari­ant will lever­age shared know­ledge in sus­tain­ab­il­ity and boast a much stronger joint innov­a­tion plat­form. This will enable the devel­op­ment of new products in order to deliv­er super­i­or returns and drive share­hold­er value.

CEO Com­ments

​“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,” said Hari­olf Kottmann, CEO of Clari­ant. ​“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.” Peter R. Hunts­man, Pres­id­ent and CEO of Hunts­man, com­men­ted: ​“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.”

Trans­ac­tion highlights

  • All-stock mer­ger of equals transaction
  • Clari­ant share­hold­ers: 52%, Hunts­man share­hold­ers: 48%
  • Hunts­man share­hold­ers receive 1.2196 shares in Hunts­man­Clari­ant for each Hunts­man share (each exist­ing Clari­ant share will remain out­stand­ing as a share in HuntsmanClariant)
  • Board of Dir­ect­ors with equal rep­res­ent­a­tion from Clari­ant and Huntsman
  • Glob­al Headquar­ters in Prat­teln, Switzer­land, Oper­a­tion­al Headquar­ters in The Wood­lands, Texas
  • Dual stock exchange dir­ect list­ing on the SIX Swiss Exchange and the New York Stock Exchange

Value Cre­ation

The new com­pany will accel­er­ate value cre­ation for share­hold­ers through a more robust com­bin­a­tion of tech­no­logy, products and tal­ent. The com­bined com­pany expects to real­ize more than $3.5 bil­lion of value cre­ation from approx­im­ately $400 mil­lion in annu­al cost syn­er­gies. The full syn­ergy run-rate will be achieved with­in two years of clos­ing. These syn­er­gies will be real­ized by redu­cing oper­a­tion­al costs and improv­ing pro­cure­ment. The tar­geted syn­er­gies rep­res­ent roughly 3 per­cent of total com­bined 2016 rev­en­ue with one-time costs up to $500 mil­lion. There will also be addi­tion­al cash-tax sav­ings.

Cor­por­ate Governance

The com­bined com­pany, incor­por­ated in Switzer­land, will be gov­erned by a Board of Dir­ect­ors with equal rep­res­ent­a­tion from Clari­ant and Hunts­man and will fol­low Swiss Cor­por­ate Gov­ernance stand­ards. Hari­olf Kottmann, cur­rent Clari­ant CEO, shall become Chair­man of the Board of Hunts­man­Clari­ant. Peter Hunts­man, cur­rent Hunts­man Pres­id­ent and CEO, will become CEO of Hunts­man­Clari­ant. Jon Hunts­man, founder and Chair­man of Hunts­man, shall become Chair­man Emer­it­us and board mem­ber of Hunts­man­Clari­ant. The mer­ger enjoys strong com­mit­ment from both Clari­ant and Hunts­man fam­ily share­hold­ers. The com­pany will be lis­ted on the SIX Swiss Exchange and the New York Stock Exchange. Hunts­man­Clari­ant will use IFRS, and begin­ning in Q1 2018 will report in USD and will start fil­ing 10Qs and 10Ks con­sist­ent with SEC require­ments.

Tim­ing

The trans­ac­tion is tar­geted to close by year end 2017, sub­ject to Clari­ant and Hunts­man share­hold­er approvals, reg­u­lat­ory approvals and oth­er cus­tom­ary clos­ing con­di­tions. Clari­ant and Hunts­man are con­fid­ent that the required reg­u­lat­ory approvals can be obtained in a timely man­ner. Source: Clari­ant Inter­na­tion­al AG
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