Huntsman and Clariant Halt Chemicals Merger, Citing Investor Revolt

from NYTs

Two of the world’s leading chemical manufacturers, the Huntsman Corporation and Clariant of Switzerland, terminated a planned multibillion-dollar merger on Friday, bowing to pressure from activist investors who opposed the deal.

The deal’s demise was the latest success for activist shareholders, who have put some of the world’s largest companies in their sights and are exerting greater influence over corporate strategy.

The proposed all-stock transaction, called a “merger of equals” by Clariant and Huntsman in May, would have been the latest consolidation in the chemicals industry and created a business with a combined market value of about $15 billion.

Some of the industry’s biggest names have sought mergers to gain scale and cut costs, including recent deals between Dow Chemical and DuPont and between Bayer and Monsanto.

“Given the continued accumulation of shares by activist investor White Tale Holdings and their opposition to the transaction, now supported by some other shareholders, we believe that there is simply too much uncertainty as to whether Clariant will be able to secure the two-thirds shareholder approval that is required to approve the transaction under Swiss law,” Peter R. Huntsman, the Huntsman chief executive, and Hariolf Kottmann, the Clariant chief executive, said in a news release.

More here.


2 Responses to Huntsman and Clariant Halt Chemicals Merger, Citing Investor Revolt

  1. Jimmy Bedoya November 10, 2017 at 2:56 pm #

    According to economics, there are four different types of business organizations. First, is a proprietorship, which is a business set up by one owner who has unlimited liability and complete ownership of the company’s assets. The second type of business it a partnership in which the business is comprised of two or more owners but subject to the same liability as a proprietorship. The third type of business is a limited liability corporation that is a combination of a proprietorship, partnership, and a corporation. Which brings me to the last type of business, a corporation. A corporation is a business that has limited liability but has multiple owners in the sense that it allows investors to buy shares, in essence taking ownership of some part of the business. These investors/owners only lose what they invest into the business in the event that the business was to dismember. Corporations are the most prominent in the United States being that they have the most owners. Due to the fact that these businesses undergo double taxation that pertains to corporate taxes and gets taxed based on dividends they issue to every owner of the company. Besides being taxed twice, these businesses must also take on numerous amounts of expenses and thus require extra funding to purchase the necessary resources and support any large projects or tasks. It is for this reason that corporations have a vast amount of investors; to progress and flourish without any financial restraints. However, though this might seem like a good idea, it is important to understand that these same investors will have a lot of power and say over what the company does. In some instances, this ability of investors to do as they please can control and push the business beyond its original agenda, negatively affecting the corporation as a whole.

    Investors controlling and changing a corporation’s agenda is exactly what happened between the Huntsman Corporation and Clarian of Switzerland, two of the world’s largest chemical manufacturers. The two companies had embarked on a proposed all-stock transaction in which the two companies would merge, creating not only the latest consolidation in the chemical industry but a business with a combined market value of $15 billion. However, though this move presented itself as ideal for the benefit of both companies and their owners, the deal was terminated the million-dollar merger by activist investors who opposed the deal. According to Peter R. Huntsman, CEO of Huntsman, and Hariolf Kottman, CEO of Clarian, because of the accumulation of shares by the activist investor White Tale Holdings and their opposition to the transaction, there was too much uncertainty as to whether Clarian would be able to secure two-thirds of its investors’ approval. Though proven to be very beneficial to both companies, both businesses could not seem to have all of its investors in agreement. This, in essence, demonstrates the exact capability of investors within corporations. They can easily choose whether or not a corporation partakes in multimillion-dollar deals, and I think that it is justified. Considering the fact that these investors are in a sense what is keeping the companies alive, they should be allowed to control the corporation in whichever way they see the best fit. The money that supports these companies are just as important as the founders because, without these funds, certain tasks and resources would not be allocated correctly.

  2. Li Zonghao December 1, 2017 at 3:17 pm #

    As Huntsman and Clariant halt their international chemical merger because of opposition from activist investor White Tale Holdings, there is still hope for citizens to get involved in issues they feel passionate about. Unlike the average citizen’s’ inability to significantly affect big entities unless through extensive and exorbitant lobbying efforts, investors can more firmly control the business world with money.

    In our capitalistic society now, we vote with our money. Whether that’s as minor as boycotting by refusing to buy milk or as large as holding large stakes in a company to generate desirable results, there are many ways for those who are not politically active to make a difference. As one of capitalism’s greatest strengths, people do have the ability to make a statement with their money. While most of the time, this doesn’t work out as powerful companies get to lobby to get favorable laws, the prevention of the Huntsman and Clariant merger is a testament to how millionaires can feasibly make a difference without throwing away all their newly earned wealth.

    Perhaps we have become too used to the inability to do anything as monopolies such as Rockfeller’s oil empire and Carnegie’s steel empire existed back before there were any anti-trust laws. The existence of such monopolies proved to be a detriment to the public as they had free reign to jack up prices and do whatever they’d like. With their dominant positions, they can also influence politics to bring about more lenient laws and crush opposition.

    However, as the government implemented and enforced anti-trust laws, there was more freedom for new firms to rise and innovation to thrive. With the main goals of the anti-trust laws being to promote healthy competition and consumer welfare is protected, there is much more freedom in the industry and people don’t have to bend to the wills of giant firms.

    Therefore, as more monopolies are broken up and such regulations gain more precedents, society will slowly but surely benefit. Although in the past, we may not be able to do much because monopolies have so much power, now as the public sentiment turns against large, concentrated power, there are more and more options to make a difference.

    The standard form of making a statement is making a protest, and recently we have seen how a famous person can leverage his position to make his statement. After Kaepernick kneeled to protest against racial oppression, many of his fellow players also did the same. Most importantly, his controversial action was able to spark a national discussion, and of course that is great because more exposure means that at the very least more people are aware of the issue. Kaepernick showed that in this Information Age, one doesn’t necessarily need money to make a statement. Rather, one can use a highly public position to make statements for a good effect.

    Maybe more similar to how White Tale Holdings directly put a stop to the Huntsman and Clariant merger by controlling the management is how art can be used to make a statement. At Art Basel, artists get the opportunity to use their artwork to convince rich fair-goers to become more aware of the refugee situation. Furthermore, renowned artists such as Olafur Eliasson who has a net worth of $2 million can directly appeal to people with his words and art by leveraging his position.
    As the public becomes less accepting of concentrated power, governments can more freely regulate, and the average citizen can do more to make a difference. Whether it’s through stock market investments, boycotting, social media, or even artwork, the world is ready for incendiary statements and bold actions rather than meek submission in the face of powerful people and entities.

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