Huntsman (HUN) & Clariant Ink All-Stock Merger Agreement
Zacks Investment Research | May 22, 2017 09:55PM ET
Chemical companies, Huntsman Corporation (NYSE:HUN) and Clariant AG entered into a definitive agreement to combine in an all-stock deal that will create a leading chemical specialty company with revenues of roughly $13.2 billion and enterprise value of about $20 billion. This merger of equals will create a formidable industry player that will help the companies grow its foothold in high-growth markets, cut operating costs and expand margins.
The merged entity will be named HuntsmanClariant. Per the terms of the agreement, while Huntsman’s shareholders will hold 48% interest in the merged entity, Clariant will hold 52% interest. Huntsman’s shareholders will receive 1.2196 shares in the combined entity in exchange for each share. The board of directors will be represented equally by both companies.
The merged entity will leverage shared knowledge in sustainability and joint innovation platform, enabling the development of new products to drive shareholders’ value and deliver superior returns. The merged entity will speed up value creation for shareholders through robust combination of products, technology and talent. This will translate into annual cost synergies of approximately $400 million and generate over $3.5 billion in value creation.
The company expects full synergy to be achieved within two years after the completion of the deal. The synergies will be realized in the form of improved procurement and operational costs. The targeted synergies represent about 3% of combined revenues for 2016, including one-time costs up to $500 million. There will also be additional cash-tax savings.
The transaction is expected to close by the end of this year, subject to shareholders and regulatory approvals and other customary closing conditions.
Huntsman’s shares have rallied 18.4% in the last three months, outperforming the Zacks categorized Original post
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