Swiss chemicals company Clariant and its American counterpart Huntsman Corporation announced on Monday that they are planning to combine their businesses in a so called, “merger of equals” by means of an all-stock transaction.
About the Merger
The joined corporation will be named HunstmanClariant which will have a group value of about $20 billion and will create a significant manufacturing competitor with headquarters located in Switzerland but major operations will be in Texas.
Clariant’s chief executive officer Hariolf Kottmann will be HuntsmanClariant’s chairman of the board, Hunstman president and CEO Peter Huntsman will be its chief executive and Jon Huntsman founder and chairman of the US group will become Chairman Emeritus and board member of the joined firm.
According to the 2016 figures, the merged company will also generate sales of almost $13.2 billion and a primary or operating income of $2.3 billion.
They expect more than $3.5 billion worth creation by annual cost synergies in surplus of $400 million. Full synergy run-rate will be accomplished within two years of closing.
The boards of both companies had reached an agreement of an all-stock transaction with Clariant shareholders acquiring 52 percent and Huntsman’s shareholders will be getting 48 percent of the combined firm.
Stakeholders of the US-based chemicals group will be receiving 1.2196 shares in HuntsmanClariant for each Huntsman stock and each obtainable share of the Swiss firm will stay outstanding as a stock in the merged company.
The share will have dual listing on the Six Swiss Exchange and the New York Stock Exchange.
Both companies plan to finalize the agreement by year end 2017.
Kottmann stated that it is the perfect deal at the right time. Clariant and Huntsman are joining forces in order to gain a much larger global reach, produce more sustained advance capability and attain new growth opportunities.
He added that it is in the best interest of all of their shareholders and that Peter Huntsman and him share the same strategic vision and he is looking forward to working with Huntsman.
Peter Huntsman responded saying that he could not be more thrilled regarding the merger and is also looking forward to work directly with Kottmann as he have a high regard for the man and have trusted him for the past decade.
Huntsman also said that together they will create a worldwide leader in the field of chemicals with a joined balance sheet offering financial strength and flexibility.
Back in April 27, Clariant reported positive first quarter earnings for 2017 with sales gaining 9 percent to CHF1.60 billion ($1.64 billion) compared to last year’s CHF1.48 billion in the first quarter.
EBITDA before exceptional items greatly increase by 10 percent to CHF250 million ($256 million) compared to CHF229 million prior year while EBITDA margin before exceptional items rose 15.6 percent.
Shares for the Swiss company at that time were mostly on the upside although its last session for April 27 slightly went down from CHF20.22 to CHF 20.20.
A day earlier to Clariant’s report, Huntsman posted positive first quarter 2017 results as well with net profit of $92 million compared to $62 million earlier year period.
Revenue was about $2.5 million compared to $2.4 million prior year.
Adjusted EBITDA was $329 million compared to last year’s $274 million while diluted income per share was $0.57 compared to $0.37 the past year.
Net cash given by operating activities was $93 million while free cash flow generation was $82 million.
Huntsman’s stock was somewhat down subsequent to its earnings report from $25.21 to $ 25.17.
Current Stock Prices
Following the announcement of the merger, Clariant’s shares was mostly on the upside lifting 8.5 percent from CHF20.91 last Friday to CHF22.69 on Monday, starting its session significantly higher than last Friday falling slightly by 09:00 GMT, but then going back up by 09:30 GMT.
Huntsman’s stocks last week was 3.3 percent high to $26.71 but declined 0.3 percent after hours to $26.62.
The greater part of Clariant’s shares is on the gaining side therefore investors are advised to remain attentive on its movement for the time being until signs of a strong confirmation of a raise.