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Clariant, Huntsman present update on planned merger
28
Jul '17
Clariant and Huntsman Corporation have presented a first update on the planned merger of equals to keep their shareholders informed. The preparations to create HuntsmanClariant, a leading global specialty chemicals company, are showing continued strong progress and are proceeding as planned with an unchanged closing targeted for December 2017/January 2018.

Clariant and Huntsman have agreed on a joint strategic direction for near- and long-term value creation based on continued focus on higher growth and higher margin businesses, expansion of existing strong downstream presence, reaping benefits of complementary product portfolios and breadth of reach to deliver an additional organic sales revenue growth of around two per cent per annum at approximately 20 per cent EBITDA margin and delivering synergies in excess of $400 million as well as the $25 million tax savings.

The merger brings together two strong specialty chemicals businesses with similar EBITDA margins at 17.2 per cent (including synergies). It will reap complementarity benefits between performance products, care chemicals and natural resources, which represent approximately 35 per cent of HuntsmanClariant combined sales and hold a comprehensive surfactants portfolio in high-end niche markets globally. It will have meaningful opportunities for growth including cross-selling potential and new product applications.

The complementary assets and geographic fit provide significant commercial opportunities and more global reach within established routes to market. Furthermore, HuntsmanClariant will take advantage of its broad asset base while continuing to move downstream into specialties and more differentiated applications. As a result of these complementary product portfolios and structures, additional organic sales revenues of around two per cent per annum at approximately 20 per cent EBITDA margin have been identified.

HuntsmanClariant’s position as a leading global specialty chemicals company will further benefit from complementary research and development and technological expertise as well as shared knowledge in sustainability and cross-fertilization in innovation and technology capabilities.

The portfolio management principles and capital allocation plans of the new company are fully aligned. There is a clear joint understanding of the combined company’s future core segments and the direct majority of investments will be directed to growth areas and growth regions. The current downstream presence will be expanded by targeting formulation- and application-based segment niches as well as high-end composites, bespoke polyurethane (PU) systems, and costumer oriented and co-developed products.

The existing presence in the adaptive chemical methylene diphenyl diisocyanate (MDI) and in chemical building blocks such as ethylene oxide (EO) and propylene oxide (PO) is to be further advanced in downstream urethane systems as well as downstream applications such as surfactants. The portfolio will be simplified. Complexity will be reduced while utilising significant strategic flexibility to consider value creating add-on acquisitions and divestments. Plastics & Coatings and Textile Effects will be managed for cash and turnaround while all other businesses will be managed for growth and margins.

The project team is progressing well in terms of joint synergy implementation and has high confidence in meeting the synergy target in excess of $400 million as well as the $25 million tax saving target. Key regulatory filings are submitted, including in the US, EU and China. No regulatory roadblocks are expected to closing the deal. A preliminary CFIUS filing has also been submitted. (SV)

Fibre2Fashion News Desk – India


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