Clariant and Huntsman Corporation announced that their Boards of Directors have unanimously approved a definitive agreement to merge through an all-stock transaction. The merged company will be named HuntsmanClariant.

The combination of both companies will create a leading global specialty chemical company with sales of approximately USD13.2 billion, an adjusted EBITDA of USD2.3 billion and a combined enterprise value of approximately USD20 billion.

The transaction is targeted to close by year-end 2017, subject to Clariant and Huntsman shareholder approvals, regulatory approvals and other customary closing conditions.

“This is the perfect deal at the right time. Clariant and Huntsman are joining forces to gain much broader global reach, create more sustained innovation power and achieve new growth opportunities,” said Hariolf Kottmann, CEO of Clariant.

“Together, we will create a global leader in specialty chemicals with a combined balance sheet providing substantial financial strength and flexibility,” said Peter R. Huntsman, president and CEO of Huntsman.

Huntsman shareholders will receive 1.2196 shares in HuntsmanClariant for each Huntsman share, while each existing Clariant share will remain outstanding as a share in HuntsmanClariant.

The board of directors will have equal representation from Clariant and Huntsman.

The combined company will have its global headquarters in Pratteln, Switzerland, with operational headquarters in The Woodlands, Texas, U.S.A.

The combined company’s stock will be listed on both the SIX Swiss Exchange and the New York Stock Exchange.

The new company will accelerate value creation for shareholders through a more robust combination of technology, products and talent. The combined company expects to realize more than USD3.5 billion of value creation from approximately USD400 million in annual cost synergies. The full synergy run-rate will be achieved within two years of closing. These synergies will be realized by reducing operational costs and improving procurement. The targeted synergies represent roughly 3% of total combined 2016 revenue with one-time costs up to USD500 million. There will also be additional cash-tax savings.

Kottmann will become chairman of the board of HuntsmanClariant while Huntsman will become CEO of HuntsmanClariant. Jon Huntsman, founder and chairman of Huntsman, shall become chairman emeritus and board member of HuntsmanClariant.