$20 billion merger collapses after hedge fund attack

Swiss chemicals giant Clariant and its U.S. rival Hunstman have axed their $ 20 billion merger after it came under attack from an activist investor group.

The two companies said Friday that they decided call the deal off because of doubts that Clariant (CLZNF) would be able to get the backing of enough shareholders to push the deal through.
Clariant shares dropped about 5% following the announcement.

The deal was undermined by White Tale Holdings, an activist investor who vocally opposed the merger and bought up Clariant shares in an effort to derail it.

White Tale, a partnership between hedge funds Corvex and 40 North, now claims to be the Swiss chemical giant’s biggest shareholder.

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“The proposed transaction has no strategic merit,” White Tale wrote in a letter published last month. “It both significantly destroys existing Clariant shareholder value and prevents Clariant from pursuing multiple alternative and immediate opportunities to unlock value for its shareholders.”

Its opposition to the deal is now being supported by other shareholders as well, Clariant and Huntsman (HUN) said.

Clariant announced on Friday that White Tale had increased its stake in the company to more than 20%. The investor’s stake was at 15% last month when it launched its attack on the merger.