Merger of equals abandoned after major Clariant investor said the deal would destroy stakeholder value

A merger deal valued at $20 billion (£15 billion) between Swiss speciality chemicals company Clariant and US bulk materials manufacturer Huntsman collapsed after it came under attack from Clariant’s biggest shareholder.

The merger ‘destroys existing Clariant shareholder value’, the investor group White Tale Holdings wrote in an open letter. The group, which owns more than 20% of Clariant’s shares, indicated that ‘the proposed transaction has no strategic merit’ and undervalues Clariant’s shares.

The deal between Huntsman and Clariant, which had been agreed on in May and was expected to close by the end of this year, would have created a speciality chemicals giant worth $13 billion in annual sales. But White Tale Holdings criticised the fact that Clariant had not ‘seriously explored alternative measures or transactions’.

Following White Tale’s opposition, other shareholders came out against the merger. Uncertainty over whether Clariant would obtain two thirds of shareholder approval – required by Swiss law for the merger to go through – led the companies to abandon their plans. Huntsman and Clariant agreed on terminating the deal without break fee.

‘We remain convinced that the proposed merger of equals … would have been in the long-term best interests of all of our shareholders,’ chief executives of Huntsman, Peter Huntsman, and Clariant, Hariolf Kottmann, said in a joint statement.

Both companies will now attend to their own strategies. ‘[We] will now focus on our proven strategy to further strengthen the company’s market position as a globally leading specialty chemicals company,’ said Rudolf Wehrli, chairman of the Clariant’s board of directors.