Huntsman, Clariant To Combine In All Stock Merger Of Equals Deal

(RTTNews) - Specialty Chemicals companies Huntsman Corp. (HUN) and Switzerland's Clariant AG (CLZNY.PK, CRN.L, CLZNF.PK) announced Monday an agreement to combine in a merger of equals through an all-stock transaction. The merged company will be named HuntsmanClariant, with a combined enterprise value of approximately $20 billion at announcement.

In the deal, Huntsman shareholders will receive 1.2196 shares in HuntsmanClariant for each Huntsman share, while each existing Clariant share will remain outstanding as a share in the new company.

Following the merger, Clariant shareholders will hold 52% of the new entity, while Huntsman shareholders will own the remaining 48% stake. The new Board of Directors will have equal representation from both Clariant and Huntsman.

The combined company's global Headquarters will be in Pratteln, Switzerland, while operational Headquarters will be in The Woodlands, Texas. The company will have dual stock exchange direct listing on the SIX Swiss Exchange and the New York Stock Exchange.

The Boards of Directors of both companies unanimously approved the definitive merger agreement.

The transaction is targeted to close by year end 2017, subject to Clariant and Huntsman shareholder approvals, regulatory approvals and other customary closing conditions.

Following the deal, Hariolf Kottmann, current Clariant CEO, shall become Chairman of the Board, and 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 the combined firm.

On a pro forma 2016 basis, the combination will create a major specialty chemical company with sales of approximately $13.2 billion, an adjusted EBITDA of $2.3 billion.

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.

Hariolf Kottmann, CEO of Clariant, said, "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."

Since taking Huntsman public in 2005, its founder and Chairman Jon Huntsman has sought a large deal. In 2007, Hexion Specialty Chemicals, previously with Apollo Management LP, agreed to buy Huntsman for $6.5 billion, but withdrew later.

Following the separation of its paint-pigments business, Jon Huntsman reportedly said in March that the company was considering a major deal.

In the deal, Citi and UBS AG are serving as Clariant's financial advisors, while BofA Merrill Lynch and Moelis & Company LLC are serving as Huntsman's financial advisors.