Clariant on Friday rejected its largest shareholder White Tale’s demand for an independent strategic review and three board seats, setting up a showdown with the activist investor which blocked its $20 billion merger with Huntsman.
Clariant instead offered just one potential seat on the Swiss specialty chemicals maker’s board to White Tale, which includes hedge fund manager Keith Meister and New York City-based investor 40 North. It owns more than 20 percent of the Swiss company.
Clariant Chief Executive Officer Hariolf Kottmann said it would update its strategy early next year but dismissed White Tale’s demands to bring in outsiders to conduct the process, saying they were “unanimously rejected” by the board of the Muttenz, Switzerland-based company on grounds they were solely aimed at a break-up.
“The process they are insisting on is nothing else than looking for bidders for all of our individual businesses with the ultimate consequence of breaking up the company and selling the assets,” Kottmann told reporters on a call.
“This is not what the existing board of directors and the existing management of the company will do.”
Clariant announced plans on Friday for a strategic update in 2018 that would include “defining further actions such as M&A activities, short-term portfolio management options, potential returns to shareholders, a thorough review of the cost base and the pursuit of additional growth opportunities.”
A spokesman for White Tale declined to comment on Clariant’s move, but the investor whose principals include 40 North’s David Winter and David Millstone has previously said it would seek to call an extraordinary shareholders meeting, if its demands were not met.
Kottmann said Clariant’s offer of a single board seat for White Tale remains a point of negotiation.
The Bavarian families who became 14 percent Clariant shareholders when the company bought Germany’s Sued Chemie in 2012 have two board seats because they committed their entire holdings to Clariant and agreed to lock them up for a longer period, Kottmann said when asked why White Tale was not offered representation commensurate with its holding.
“You can’t compare the two cases,” Kottmann said, adding the Bavarian families support Clariant’s course of action.
He declined to speculate on whether he had sufficient support from other investors, should White Tale call a special shareholder meeting seeking to replace management and the existing Clariant board.
“In our last road show, in the last three weeks, we met around 60 percent of our institutional shareholders. In the discussions with them, we got support for what we presented to them,” Kottmann said.
“How our shareholders will vote in an extraordinary general meeting, I don’t know. We will see.”
Clariant abandoned its merger with Huntsman after White Tale continued to boost its stake, making it increasingly unlikely that the Swiss company would achieve a two-thirds majority necessary among its investors to approve the combination.
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