The Strategist

Huntsman and Clariant to create $20 bln-worth industry giant

05/22/2017 - 14:07

Leading chemical corporations - American Huntsman and Swiss Clariant - agreed to merge equals by exchanging shares. The deal will create a chemical giant with a total value of about $ 20 billion including debts.

Jorge Barrios Riquelme
Jorge Barrios Riquelme
As press services of the both companies reported today, the boards of directors of Huntsman and Clariant unanimously supported signing the final agreement on the merger of equals by exchanging shares. The merged company’s value, which will be called HuntsmanClariant, will amount to around $ 20 billion, taking into account debts of the both companies. According to the deal’s participants, the combined sales will reach $ 13.2 billion, and the adjusted EBITDA - $ 2.3 billion. Under the terms of the agreement, Clariant’s shareholders will receive 52% of the combined company, the remaining shares will go to shareholders of Huntsman. The newborn HuntsmanClariant will be led by Huntsman’s Head Peter Huntsman, and the board of directors will be headed by Clariant’s current CEO Hariolf Kottmann. The combined company, with offices in more than 100 countries around the world, will employ about 32,000 people. 

Swiss chemical corporation Clariant was formed in 1995 as a result of separation from Sandoz company. It specializes in the production of chemical products for the textile, mining, printing and metallurgical industries. As a result of 2016, the manufacturer’s sales grew by 2% and reached $ 5.9 billion, the net profit increased by 16% to $ 270 million. The company's shares have grown by almost 30% since the beginning of the year. The market capitalization reaches $ 7.8 billion.

American corporation Huntsman was founded in 1982 as a private company. Its shares have been listed on the New York Stock Exchange since 2005. The company produces dyes, polymers, polyurethane products. Huntsman owns more than hundred production and research enterprises in 30 countries. The net profit in 2016 increased almost threefold and reached $ 357 million, the revenue amounted to $ 10.3 billion. Huntsman's shares have grown by almost 40% since the beginning of the year. The company’s market capitalization currently reaches $ 6.62 billion.

The merger of Huntsman and Clariant rides on the wave of active consolidation in the chemical industry. AT Kearney research company calculated that combined volume of planned M&A deals in the chemical industry will reach more than $ 300 billion, and this number is more than twice higher than the previous record level documented at the end of 2015. The companies regard the M&A deals as an opportunity to reduce costs by closing duplicate lines of business, as well to expand sources of profit by entering new markets. According to analysts surveyed by Bloomberg, Huntsman and Clariant’s cost saving will reach to $ 500 million per year. Analysts expect the transaction to be completed by the end of the year. Shares of both companies jumped once the merger was announced: Huntsman climbed by 3.4%, and Clariant – by 9.3%.