Coverage: Huntsman in talks to merge with Clariant

Huntsman Corp. and Clariant AG are in talks to combine in a deal that would create a chemicals company valued at about $14 billion.

Matthew Monks and Jack Kaskey of Bloomberg News had the news:

The U.S. and Swiss companies haven’t yet agreed on a deal but as envisioned Clariant would own about 52 percent of the combined entity called HuntsmanClariant, according to the person, who asked not to be identified discussing the talks. Huntsman Chief Executive Officer Peter Huntsman would hold that title for the combined company and the board would be evenly split, with Clariant CEO Hariolf Kottmann as chairman.

Representatives of the companies didn’t immediately return calls for comment outside regular business hours. The talks were reported earlier today by the Wall Street Journal.

Clariant was mentioned by analysts as a potential partner after Huntsman’s chairman, Jon Huntsman Sr., flagged in March that the company was considering a major merger to follow the separation of its paint-pigments business. The Woodlands, Texas-based company was “looking seriously at the possibility of doing a merger or doing something that would double or triple our revenues,” Huntsman said at a conference in San Antonio, Texas.

Huntsman had surged in October after the company detailed plans to spin off the unit that makes titanium dioxide, or TiO2, a white pigment with volatile earnings that have depressed the stock price. DuPont Co. spun off its TiO2 business as Chemours Co. in 2015, after prices for the chemical used in coatings, plastics, food and toothpaste tumbled from a 2011 peak.

Greg Roumeliotis and Ludwig Burger of Reuters report that the companies had talked before:

The deal would combine Clariant, a Muttenz, Switzerland-based maker of aircraft de-icing fluids, pesticide ingredients and plastic coloring, with Woodlands, Texas-based Huntsman, whose chemicals are used in paint, clothing and construction.

The agreement comes after Reuters reported last March that Clariant and Huntsman previously ended merger talks because of disagreements over who would play the lead role.

In an attempt to structure a merger of equals, the two companies have now agreed that Huntsman Chief Executive Peter Huntsman will become CEO of the combined company, while Clariant CEO Hariolf Kottmann will become chairman, the sources said.

The combined company will be headquartered in Switzerland, though its operational center will be in Woodlands, Texas, one of the sources added.

The sources asked not to be identified because the negotiations are confidential. A Huntsman spokesman declined to comment, while Clariant did not immediately respond to a request for comment.

Jordan Blum of FuelFix reported that Huntsman has been looking to make deals:

But Peter Huntsman in recent interviews with the Houston Chronicle has suggested that the company was considering such deals as way to grow. He has repeatedly expressed his interest in dealmaking throughout this year.

“We are probably more open to the idea of a potential merger than we would have been in the past,” Huntsman said in a previous interview. “This company is poised to expand, and I like to think mergers is one of those areas.”

Huntsman has a market capitalization value of $6.4 billion versus Clarinet’s value of just more than $7 billion.

The two companies combine to employ more than 32,000 people in over 100 countries.

Locally, Huntsman employs 1,000 people in The Woodlands, including 300 at its nearby Advanced Technology Center. That’s not counting additional workers at Huntsman’s regional manufacturing facilities in Houston, Conroe, Alvin, Dayton, Port Neches and Freeport.