Investor wants to stop merger of Huntsman and Clariant

This was probably not the plan: The friendly merger of Swiss Clariant and US-based Huntsman was set out to be a smooth ride. But now a hedge fund has intervened to stop the project before it even started.

White Tale is fighting against a merger of Clariant and Huntsman. (Picture: Brian Jackson - Fotolia) -

When both companies announced the planned merger in May they were probably not expecting problems like this. Both companies were committed to the merger and arrangements were set in a way that the management from both sites would stay in powerful positions in the new company. In an interview to the Swiss news portal “Finanz und Wirtschaft”, Clariant’s CEO Hariolf Kottman stated, that he would not expect any competing offers.

7.2 percent to fight of the merger (Update: 10 %)

Now, Corvex, a hedge fund from New York, and 40 North, a roofing materials company from the US, intervened and bought 7.2 % of Clariant’s shares through a body called White Tale to stop the merger. “There are excellent opportunities to unlock value from the many high quality businesses that currently comprise Clariant,” said a spokesman to Reuters, “unfortunately, we do not believe that the proposed merger with the Huntsman Corporation is one of those options.”

However, even though the deal between Huntsman and Clariant is based on a mutual agreement, it was not necessarily easy to come to an agreement. According to Reuters, talks for a merger ended last year because Clariant was not willing to enter a deal were it would play the minor role. The proposal by Huntsman at that time stated that Clariant would sell its Coatings and Plastic division. The issue seems to be resolved in the current deal, but as the intervention from Corvex and 40 North shows, there are still shareholders that are still not in favour of the merger in its current form.

Keith Meister, founder of the Corvex hedge fund, is a well-known investor. He was working closely with investment legend Carl Icahn several years. He founded Corvex in 2010 which is now managing assets worth $6 billion.

Update: On July 20 the swiss company released a statement informing that White Tale is now owning more than 10 % of the companies share.

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