THE WOODLANDS, Texas—Clariant International Ltd. and Huntsman Corp. have mutually terminated the proposed "merger of equals" on Oct. 27. The decision was unanimously approved by the boards of directors of Clariant and Huntsman, based in The Woodlands.
Clariant, based in Muttenz, Switzerland, also confirmed that White Tale Holdings has increased its stake in Clariant in excess of 20 percent. This follows earlier mandatory notifications by White Tale Holdings to the Swiss Stock Exchange regarding its holdings.
In a joint statement, Peter R. Huntsman, President and CEO of Huntsman, and Clariant CEO Hariolf Kottmann said: "We remain convinced that the proposed merger of equals as agreed to on May 21, 2017, would have been in the long-term best interests of all of our shareholders. However, given the continued accumulation of Clariant shares by activist investor White Tale Holdings and its opposition to the transaction, which is now supported by some other shareholders, we believe that there is simply too much uncertainty as to whether Clariant will be able to secure the two-thirds shareholder approval that is required to approve the transaction under Swiss law.
"Under these circumstances and in light of the high level of disruption and uncertainty that has been created for both companies, we have jointly decided to terminate the merger agreement. This will allow both companies to focus again fully on their respective stand-alone strategies in the best interests of the companies and their shareholders, associates, and other stakeholders. We maintain a great respect for one another, and we want to recognize and express our mutual and deep appreciation for the efforts and incredible commitment demonstrated by the associates of each company over the past several months."
Clariant Chairman Rudolf Wehrli said in a statement that the firm regrets the missed opportunity for value creation, adding that company will now focus on further strengthening the company's market position as a globally leading specialty chemicals company.
The proposed merger would have created a specialty chemicals and plastics company with annual sales of around $13 billion.
Neither company is expected to pay a break fee, per the termination agreement. Clariant will avoid paying both the $210 million deal breakage fee and the $60 million EGM nonapproval fee as foreseen in the merger agreement.
"We viewed this merger of equals as an opportunity to accelerate our downstream growth and for two great companies to become even better together," Peter Huntsman said. "However, it is not the only option for Huntsman to create real and lasting value."