Switzerland-based Clariant (SIX: CLN) and Texas-based Huntsman Corporation (NYSE: HUN) said they agreed to combine in a merger of equals through an all-stock deal. The merged company will be named HuntsmanClariant, with Clariant shareholders holding a 52% stake, and Huntsman shareholders a 48% stake.
On a pro forma 2016 basis, the merger will create a leading global specialty chemical company with sales of approximately $13.2 billion, an adjusted EBITDA of $2.3 billion and a combined enterprise value of approximately $20 billion.
“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,” said Hariolf Kottmann, CEO of Clariant. “This is in the best interest of all of our stakeholders. Peter Huntsman and I share the same strategic vision and I look forward to working with him.”
Peter R. Huntsman, President and CEO of Huntsman, commented: “I could not be more enthusiastic about this merger and look forward to working closely with Hariolf Kottmann, a man I have admired and trusted for the past decade. We also look forward to a close association with his immensely talented colleagues around the world. Together, we will create a global leader in specialty chemicals with a combined balance sheet providing substantial financial strength and flexibility.”
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.
The combined company, incorporated in Switzerland, will be governed by a Board of Directors with equal representation from Clariant and Huntsman and will follow Swiss Corporate Governance standards. Hariolf Kottmann, current Clariant CEO, will become Chairman of the Board of HuntsmanClariant. Peter Huntsman, current Huntsman President and CEO, will become CEO of HuntsmanClariant. Jon Huntsman, founder and Chairman of Huntsman, will become Chairman Emeritus and board member of HuntsmanClariant.
The merger enjoys strong commitment from both Clariant and Huntsman family shareholders. The company will be listed on the SIX Swiss Exchange and the New York Stock Exchange. The deal is expected to close by year end 2017, subject to shareholder and regulatory approvals and other customary closing conditions.
Citi and UBS AG are serving as Clariant’s financial advisors for the transaction, with Homburger and Cleary Gottlieb Steen & Hamilton serving as its legal advisors.
BofA Merrill Lynch and Moelis & Company LLC are serving as Huntsman’s financial advisors for the transaction, with Kirkland & Ellis, Bär & Karrer and Vinson & Elkins acting as its legal advisors.