Huntsman, Clariant Agree on a $14 bn merger

7 years ago - Published in Finance, Fundamental Analysis

Hunstman Corp and Switzerland's Clariant AG announced their merger on Monday; the deal would create a trans-Atlantic company valued at about $14 billion offering an array of chemicals such as polyurethanes, pigments, automotive fluids, additives and resins that are used across industries ranging from aerospace to agriculture to household cleaning.
Under the terms of the proposed deal, Clariant shareholders would own 52 percent of the combined company. Huntsman shareholders, including its eponymous founding family, would own the rest.

Huntsman Chief Executive Peter Huntsman would hold that title at the new company, with Clariant CEO Hariolf Kottmann taking the chairman role. The new group, with board representation evenly split, would be called HuntsmanClariant.
Together Huntsman and its Swiss-based rival would operate in more than 100 countries and employ about 32,000 people.

Huntsman had $1.7 billion of gross profit on $9.8 billion of revenue, led by the polyurethanes division, which makes products used in seat padding and insulation. The company is based in The Woodlands, Texas.
Clariant was valued at about 6.9 billion Swiss dollars, or roughly $7 billion, as of Friday, and it earned $260 million on top of $6.1 billion in sales.

The expected tie-up comes amid a period of consolidation in the chemicals industry as companies seek to cut costs by eliminating overlapping operations and products, and seek new sources of revenue by tapping new markets and customers.

A number of producers, from Dow and DuPont to Bayer and Monsanto, have sought to combine to gain scale and cut costs.

The merged businesses could probably cut costs by $500 million a year, Hassan Ahmed, an analyst at Alembic Global Advisers said before the announcement. Clariant businesses such as plastics, coatings and personal care complement Huntsman divisions such as polyurethanes and performance products, he said. 

The US company first hit it big more than more than 40 years ago making the cheap, plastic “clamshell” containers for McDonald’s Big Mac burgers, but now focuses more on the specialty chemicals, plastics, foams and composite materials that go into Boeing airplanes, BMW cars and Nike shoes.

Clariant, which is headquartered in Muttenz, in northern Switzerland, was created in 1995 when it was spun off from the chemical company Sandoz.