Clariant-Huntsman Announce Merger in a Deal Worth $20 Billion

Clariant International Ltd. and Huntsman International LLC on Monday, 22 May 2017, announced a definitive agreement meant to merge and create a $20 billion global speciality chemicals company. The new entity will be called HuntsmanClariant

Clariant is a Switzerland-based speciality chemicals company, which was formed in 1995 as a spin-off from Sandoz. Huntsman Corporation, on the other hand, is an American multinational manufacturer and marketer of chemical products for consumers and industrial customers. 

Huntsman is expected to hold a 48% share while Clariant is expected to hold the other 52%. The deal is valued at around $20 billion when including debt, Clariant said in a statement. As per media reports, Huntsman CEO Peter Huntsman is expected to keep the same title under the merged company, while Clariant CEO Hariolf Kottmann would become the chairman of the newly merged entity.

Clariant deals mostly in additives, catalysis & energy, functional minerals, industrial & consumer specialties, oil & mining services and pigments; packaging, agriculture, automotive, appliances, pharmaceuticals, construction and textiles are Clariant’s major end use industries. Huntsman is involved mostly in the manufacturing of advanced materials, performance products, pigments and additives, polyurethanes and textile effects with chemicals, plastics, automotive, aviation, textiles, footwear, paints and coatings, construction, technology, agriculture, health care, detergent, personal care, furniture, appliances and packaging as major end use industries.

As per company annual reports, Clariant in 2016 registered revenues of almost $6 billion. However, Clariant’s revenues were dwarfed by those of Huntsman, who earned over $9.5 billion in 2016, but Huntsman debts of almost $3.7 billion were significantly higher than those of Clariant (around $2.9 billion) in 2016. Furthermore, Clariant’s cash & cash equivalent availability was much higher than that of Huntsman, over $1 billion to $414 million, respectively.

According to a TechSci Research report titled “Global Pigments Market By Type, By Application, Competition Forecast and Opportunities, 2011 – 2021”, global pigments market size was estimated at $28.49 billion in 2016. Clariant and Huntsman were the second and third highest demand generators in 2015, with a cumulative demand share of almost 12% and were expected to continue dominating the market through 2021.

Furthermore, TechSci Research also highlighted the Merger & Acquisition trend that dominated the global Pigments industry, given the highly fragmented nature of the market. Given Huntsman’s historical affinity for M&A (Huntsman Corporation acquired the performance additives and titanium dioxide business divisions of Rockwood Holdings, Inc for USD1 billion in 2014), the reliability of the trend seems to have culminated in the recent Huntsman-Clariant merger.

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