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The activist investor fighting Clariant’s planned $20 billion merger with Huntsman Corp has built a 15.1 percent stake in the Swiss chemicals maker, making it the company’s biggest shareholder.

In a letter to Clariant’s board of directors, White Tale Holdings, a vehicle created by investor Keith Meister’s Corvex hedge fund and New York’s 40 North, underscored its opposition to the Huntsman deal.

“Unfortunately, we remain convinced, and increasingly so, that the proposed merger is detrimental to Clariant shareholders,” it said in the letter published on Tuesday.

“It both significantly destroys existing Clariant shareholder value and prevents Clariant from pursuing multiple alternative and immediate opportunities to unlock value for its shareholders.”

The investor, which said it was open to joining Clariant’s board, said alternatives included selling its plastics and coatings unit, which accounts for 43 percent of the company’s 5.8 billion Swiss francs ($6 billion) in annual revenue.

Clariant is the latest company to have its plans challenged by an activist investor, with global companies including Nestle and BHP Billiton both facing criticism.

Clariant shares rose 0.3 percent in early trading, bringing their gain since just before the merger was announced on May 22 to 14 percent. Huntsman shares have risen 7.3 percent.

In July, Clariant said White Tale Holdings held “in excess of 10 percent” of shares.

Clariant and Huntsman in May announced a merger valued at around $20 billion including debt in which Clariant shareholders would hold 52 percent of the combination.

They talked up prospects for faster growth for the combined company as rationale for “a merger of equals”. Among other things, they expect about $400 million in annual cost synergies.

However, White Tale, which made public its opposition in July, said around 300 million Swiss francs of these savings could be achieved by Clariant alone.

“The terms of the proposed merger significantly undervalue Clariant’s shares while they simultaneously overvalue Huntsman at the peak of its cyclical commodity business cycle,” White Tale said.

Clariant said on Tuesday it was preparing a response.

Kepler Cheuvreux analyst Christian Faitz, rejected White Tale’s criticism.

“White Tale’s suggestions are naïve, in our view,” he said. “Real life in the chemical industry is not planned on a consultant or banker flip chart.”

In a newspaper interview published this month, Huntsman Chief Executive Peter Huntsman said shareholders in Clariant and his own company “almost without exception” supported the deal after learning the rationale.

Two-thirds of Clariant shareholders must back the merger at a special meeting for it to proceed. The date has yet to be set, with Clariant CEO Hariolf Kottmann saying he would only schedule it after regulators approve the deal.

At the Swiss company’s last annual shareholder meeting in March, however, investors representing only 53 percent of the share capital voted.

At that participation level, White Tale would have just shy of 30 percent of the votes and would need only a limited number of allies to halt the deal.

However, it is likely turnout at the next meeting will be higher. To that end, Kottmann has been meeting investors, including at the Dorchester Hotel in London this month, to convince them of the transaction’s merits.

A person close to the matter said Clariant’s second-largest investor, a group of Bavarian families who hold about 14 percent of the shares, remained “fully supportive” of the merger.

($1 = 0.9604 Swiss francs)

By Joshua Franklin, John Miller

Source: Reuters