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The Rhine still lures treasure seekers, long after Alberich swiped the Rheingold in Wagner’s operatic cycle. US hedgies, led by Keith Meister of Corvex, are battling with the board of Clariant over the value of the Swiss chemicals group. They have already blocked a $15bn merger with Huntsman of the US. Now they plan to take their demands for board seats and a strategic review to other investors.
In theory, Clariant and White Tale — the vehicle of the US activists — have the same objective: to sell a plastics and coatings division valued at more than $4bn and invest in speciality chemicals. In practice, neither side trusts the other further than wee Alberich could throw Thor’s hammer.
Clariant does not want an independent investment bank to conduct a review, as White Tale wishes. It says no bank is independent of the desire to make a buck. Maybe so, but a review could be framed so an immediate sale of the plastics unit is one option rather than its conclusion.
The Swiss want to wait for an chance for a back-to-back swap into speciality chemicals. Investors struggle to time switches between equity and cash well. Clariant would, too. A group capitalised at SFr8.6bn would face pressure to distribute a cash pile of SFr4bn. Meanwhile, Clariant is doing tolerably. Profits should rise at a fair lick in coming years. The shares are up 160 per cent over five years and command a meaty forward earnings multiple.
Clariant should clear the decks as the dispute escalates, by clearing out a board that lacks an indisputable majority of independent directors.
The group’s governance looks weak. But the motives of the US activists appear short-termist. White Tale holds more than 20 per cent while family investors who bought into Clariant through a merger have 14 per cent. Let independent investors settle the dispute. The seats in the Festspielhaus are hard, so bring cushions. US activism has a chance of a historic — nay, histrionic — victory in Europe.
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