Clariant’s $20 billion merger with Huntsman Corp in doubt after White Tale becomes Clariant’s biggest shareholder.

As per White Tale the merger between the two Swiss chemical makers did not make sense since it does not bring about value to shareholders. Of the $400 million cost savings that are targeted through the merger, Clariant alone could bring about a cost savings of $312 million (300 million Swiss francs).

On Tuesday, in a significant development the activist investor who is battling Clariant’s planned $20 billion merger with Huntsman Corp, has built up a 15.1% stake in the company which makes him the Swiss chemical maker’s biggest shareholder.

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

“Unfortunately, we remain convinced, and increasingly so, that the proposed merger is detrimental to Clariant shareholders,” wrote White Tale in the letter which was published on Tuesday.

The letter goes to to read, “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 letter urges Clariant to look at strategic alternatives other than the tie-up with Huntsman and disclosed it was open to joining the company’s board.

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

Earlier this year in May, Clariant and Huntsman had announced a merger which was valued at around $20 billion, including debt, which saw Clariant shareholders holding a 52% stake in the combined company.

The rational for “a merger of equals”, both companies were targeting faster growth and among other things expected $400 million in annual cost synergies.

As per White Tale, which made public its opposition to the deal in July, Clariant alone could bring about a cost savings of $312 million (300 million Swiss francs).

“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,” said White Tale.

Clariant was not immediately available for comment.

Two-thirds of Clariant’s shareholders have to back the merger at an extraordinary general meeting for it to proceed.

($1 = 0.9605 Swiss francs)


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