Saudi Basic Industries Corp. (SABIC) has acquired a 24.99% stake in Clariant AG, making the Saudi Arabian petrochemical producer the largest stakeholder in the Swiss specialty chemical company. These stakes were previously held by activist shareholders White Tale and 40 North.
Clariant AG abandoned merger plans valued at USD 20 billion with Huntsman Corp. last October because of opposition from activist investors.
White Tale, which is funded by Keith Meister’s Corvex hedge fund, and New York investment vehicle 40 North, campaigned against the merger, arguing that a tie-up of the two companies would transform Clariant from a pure-play specialty chemicals company into an “unfocused and commodity-oriented business with increased volatility and a lower market multiple.”
Ranked among the world’s largest petrochemicals manufacturers, SABIC is a public company based in Riyadh, Saudi Arabia. Majority of SABIC (70%) shares are owned by the Saudi Arabian government, while the remaining 30% is publicly traded on the Saudi stock exchange.
SABIC has a significant specialty chemicals business and a partner of Clariant in the Catalyst joint venture Scientific Design.
“Clariant AG is complementary to SABIC’s existing specialties business and is well in line with SABIC’s strategy of opening up new growth opportunities in specialty chemicals,” said SABIC CEO Yousef al-Benyan. SABIC has been restructuring its operations to diversify its products. It has also been expanding abroad to be closer to markets and feedstock.
Clariant said it intends to engage with SABIC over the coming weeks in order to discuss the new situation and explore possible ways to create value.
SABIC did not say how much it paid for the Clariant shares, but the stake is worth USD 2.4 billion based on its market capitalization. The acquisition is being financed by foreign banks. SABIC said the financial impact on the company’s balance sheet would appear in the first quarter.
The closing of the transaction is subject to completing regulatory approvals.