Activist investor White Tale Holdings has written an open letter to chemical company Clariant’s Board, urging members to pull out of the planned $15m merger with Huntsman and explore strategic alternatives.
White Tale, which is controlled by hedge funds 40 North and Corvex, recently increased its stake in Clariant to approximately 15.1%, equivalent to 50.1 million shares.
“As you know, we have attempted to work constructively with you and your advisors over the past two months, out of the public spotlight,” wrote White Tale.
“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 shareholders.”
The Cayman Island-based company also called on the Board to hire an independent investment bank to evaluate all strategic alternatives and to pursue becoming a pure-play specialty chemicals company.
“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.”
Clariant and Huntsman respond
Clariant and Huntsman have both reiterated their commitment to the planned merger of equals.
In response to White Tale, Clariant said in a statement: “Clariant does not agree with the statements made by White Tale in their open letter.”
Specifically, Clariant said that the proposed merger is a continuation of its strategy to become a world leader in specialty chemicals.
Meanwhile, Huntsman called White Tale’s claims about its performance “false attacks”. It stated: “In an apparent effort to engineer a short-term rise in the Clariant stock price, White Tale has advanced a destructive, high risk strategy of dismantling Clariant and denying all other stakeholders of the company the sustainable, long-term benefits of this compelling combination…
“Instead of questioning Clariant's motivations, Clariant investors should ask why Corvex has lost billions of funds under management in recent years and returns have been poor.”
Clariant confirmed that the deal will continue to progress and a further update on the merger will be released in the coming weeks.