SABIC, in a significant downstream move into speciality chemicals, has agreed to acquire the entire stake held by the activist investors, 40 North and Corvex Management, in Clariant.
SABIC says it will buy approximately 83 million Clariant shares from the two companies, which they hold via the investment fund White Tale Holdings, making it Clariant’s largest shareholder, with approximately 24.9% of the equity. SABIC says the move represents another milestone in its growth and diversification strategy to become the preferred world leader in chemicals. The value of the proposed deal was not disclosed. Sabic says it “currently has no plans to launch or otherwise effect a full takeover” of Clariant. Closing of the transaction is subject to completing regulatory approvals. The 24.9% stake had a market value of 2.35 billion Swiss francs ($2.5 billion), based on Wednesday’s closing price, giving an indication of what SABIC might have agreed to pay. This would be SABIC’s biggest acquisition since buying General Electric Plastics for $11.6 billion in 2007.
Clariant’s shares fell 5.2% after the announcement, as investors saw the move as heralding the end of speculation that White Tale might force a break-up and auction of Clariant’s businesses, or possibly attract a full takeover of the company. White Tale’s aggressive accumulation of a large minority stake in Clariant was instrumental in blocking last year’s proposed merger with Huntsman as the Swiss company was unable to guarantee the necessary two-thirds vote of shareholders in favor of the deal.
Clariant has confirmed that SABIC’s acquisition of the shares previously held by White Tale and 40 North, makes SABIC the largest Clariant shareholder. “Clariant intends to engage with SABIC over the coming weeks in order to discuss the new situation and explore possible ways to create value. Clariant will also continue the existing dialogue with all its other shareholders,” the company said. .
Yousef al-Benyan, SABIC’s vice chairman and CEO, said, “This acquisition is part of SABIC’s long-term growth strategy to remain committed to product differentiation and creating value for its customers. Clariant AG is complementary to SABIC’s existing specialties business and is well in line with SABIC’s strategy of opening up new growth opportunities in specialty chemicals.”
SABIC and Clariant have already had a successful relationship in their joint venture, Scientific Design, a process technology and catalyst development company. SABIC says it is looking forward to engaging in discussions with Clariant. David Winter, Co-CEO of Standard Industries and Co-CIO of 40 North, said, “SABIC is an established global leader in the chemicals industry with a world-class management team and a long-term, sophisticated vision for the future. We are confident that this transaction allows Clariant to continue on its path to becoming a global specialty chemicals leader.”
Specialties, currently one of SABIC’s four business sectors, is by far the smallest. The business in 2016 created a new organizational structure with three independent business units: resins, specialty compounds, and performance products. It focuses on transportation, healthcare, display and electronics, and architectural systems. Ernesto Occhiello, SABIC executive VP/specialties, told CW recently that he plans to almost double the unit’s $3-billion/year sales in the next five years through organic growth and to acquire companies or businesses that would help propel it to a top-five position in specialties worldwide.
By Natasha Alperowicz
Source: Chemical Week
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