Clariant ending governance deal with SABIC stirs takeover talk

By John Revill

ZURICH (Reuters) -Clariant and its main shareholder Saudi Basic Industries Corp are to end a so-called “governance agreement” defining their relationship, stirring speculation SABIC could launch a full takeover bid for the Swiss chemicals firm.

Clariant shares jumped 8.4% to become the top performer on Europe’s main STOXX index after the announcement on Tuesday, which fuelled rumours in Swiss media surrounding Clariant and SABIC ranging from a complete takeover by the Saudis to a sale of their Clariant stake.

The 2018 agreement guarantees SABIC’s position as a strategic anchor shareholder and confirmed Clariant’s independence as a publicly listed company under Swiss corporate governance.

But after the agreement lapses on June 22, Clariant and SABIC will no longer form a group regarding the attribution of voting rights, Clariant said.

Clairant Chairman Guenther von Au said he thought SABIC would continue to support Clariant in future. “We are confident on SABIC’s support in the spirit built over the years,” he said in a statement.

SABIC now holds a 31.5% stake in Clariant, according to Refinitiv data, just short of the 33.33% level where it would have to make a offer for the rest of the company under Swiss takeover rules.

SABIC has been approached for comment.

Baader Bank analyst Markus Mayer said the agreement’s expiry opened the way to a potential takeover.

“Like a mantra we flagged many times in the past that for us Clariant is the most obvious takeover target in the sector,” he said.

“Its valuation is far too cheap. The chemical processing catalyst market is after years of no change in a consolidation phase, (and) chemical processing catalysts… will profit structurally from the high energy price level and high CO2 prices,” he said.

SABIC would have to make an offer of more than 29 francs per share to be successful, he said. Shares on Tuesday rose to 18.73 francs.

Jefferies meanwhile thought the expiry could trigger the departure of SABIC as a shareholder.

“The expiration of the governance agreement is likely to increase market speculation surrounding Clariant as a special situation, and SABIC’s long-term involvement as a shareholder,” said Jefferies analyst Chris Counihan in a note.

The end of the agreement could also lead to SABIC calling for a break-up of Clariant, he added.

“Clariant has 3 segments with different chemistries/end markets and the strategic rationale of maintaining this portfolio in a group may also be questioned.”

Separately, Clariant also said it would publish on May 19 its fourth-quarter earnings report, which had been delayed following allegations of accounting manipulation.

(Reporting by John Revill; Editing by Paul Carrel, Rashmi Aich amd Jan Harvey)