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DGAP-News: White Tale: Open letter to the BoD of Clariant

DGAP-News: White Tale: Open letter to the BoD of Clariant
19.09.2017 07:03:40

White Tale: Open letter to the BoD of Clariant


EQS Group-News: Dynamics Group AG / Schlagwort(e): Sonstiges

White Tale: Open letter to the BoD of Clariant

19.09.2017 / 07:03


Dr. Rudolf Wehrli

Chairman of the Board of Directors

Dr. Hariolf Kottmann

CEO and Chairman of the Executive Committee

Clariant AG

Rothausstrasse 61

4132 Muttenz 1


Dear Dr. Wehrli, Dr. Kottmann and Members of the Board:

White Tale Holdings ("White Tale"), an investment partnership jointly held

by Corvex and 40 North, currently owns approximately 50.1 million shares or

15.1% of Clariant AG ("Clariant"), making it the company's largest

shareholder. As you know, we have attempted to work constructively with you

and your advisors over the past two months, out of the public spotlight, to

better understand the Board's questionable logic in pursuing Clariant's

proposed merger with the Huntsman Corporation ("Huntsman"). Unfortunately,

we remain convinced, and increasingly so, that the proposed merger is

detrimental to Clariant shareholders. It both significantly destroys

existing Clariant shareholder value and prevents Clariant from pursuing

multiple alternative and immediate opportunities to unlock value for its


To be clear:

1. The proposed transaction has no strategic merit and is a complete

reversal of your own publicly-stated strategy of becoming a pure-play

specialty chemicals company. After a decade of transforming Clariant's

portfolio toward higher-margin specialty products, you would immediately

undo all of that work by taking Clariant back to being an unfocused and

commodity-oriented business with increased volatility and a lower market

multiple. This runs counter to both your own stated goals for the company

and industry trends toward specialization.

2. 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.

3. The Board plans to cede operational control of one of the industry's most

prized specialty chemicals companies for no control premium to Huntsman's

management, demonstrating a severe lack of due diligence with regard to

Huntsman's operational track record.

4. The company's rationale for the transaction appears to be adding scale

for scale's sake and relying completely on the resulting cost synergies. We

believe that approximately CHF 300 million of the ambitious CHF 400 million

in potential cost synergy could be achieved by Clariant alone through a

robust cost optimization plan without giving away nearly half of that value

to Huntsman shareholders.

By all accounts, it does not appear that the Board seriously explored

alternative measures or transactions to maximize shareholder value in

advance of agreeing to merge with Huntsman, despite numerous credible

reports of strategic interest in both parts of and in all of Clariant's

business. In particular, and by your own admission, the company can

immediately and accretively sell its Plastics and Coatings business at an

attractive valuation with minimal tax leakage. This would be consistent with

the strategy of becoming a pure-play specialty chemicals company and leave

Clariant with maximum financial capacity to re-invest in its core specialty

business without forgoing any strategic options. Stating that the combined

Clariant and Huntsman would do just this following the merger defies basic

rational business principles, as it would give away nearly half of this

enormous value creation opportunity to Huntsman without fair consideration.

No shareholder should be asked to approve this merger without the Board's

full exploration of avenues to maximize shareholder value. With this in

mind, we call on the Board to work closely with White Tale and to

immediately hire an independent investment bank to evaluate all strategic

alternatives and simultaneously continue down the path of transformation to

become a pure-play specialty chemicals company with a new and robust cost

optimization plan. If such actions require Huntsman's consent under the

existing agreement, the Board should seek to obtain it without delay.

Without this exploration of alternatives, we will be forced to vote against

the merger and, assuming the merger is voted down, we will insist that the

exploration of alternatives - something that should have occurred prior to

agreeing to the merger - begin promptly at that time.

We are prepared to work constructively with the company and its advisers, in

a manner consistent with your obligations, including by serving on the Board

of Directors, in order to achieve these goals. However, the Board now must

finally undertake a full and disinterested review of all available

opportunities to create shareholder value - something that has not happened

to date.


David J. Millstone David S. Winter

Co-CIO of 40North Co-CIO of 40North

Co-CEO of Standard Industries Co-CEO of Standard Industries

Keith A. Meister

Managing Partner, Corvex Management


Zusatzmaterial zur Meldung:

Dokument: http://n.eqs.com/c/fncls.ssp?u=EVFMHWQFGV

Dokumenttitel: Open Letter to Clariant


Ende der Medienmitteilung


610741 19.09.2017



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