Huntsman Corp. eyeing Clariant and Ciba

0 Comments | Deseret News (Salt Lake City), Jun 21, 2007 | by Antonio Ligi

Shares of Clariant AG, the world's second-largest maker of specialty chemicals, and Ciba Specialty Chemicals AG surged after Handelszeitung reported that Huntsman Corp. considers both companies takeover candidates.

Salt Lake-based Huntsman, the world's biggest maker of specialty adhesives, said the acquisition of all or part of Clariant or Ciba may be of interest, the newspaper reported, citing Chief Executive Officer Peter Huntsman.

Russ Stolle, a Huntsman spokesman, said in a telephone interview the company isn't holding buyout discussions with either Swiss chemical maker.

Clariant, based in Muttenz, Switzerland, has been considered a takeover target after profit slumped following its $2 billion purchase of U.K.-based fine-chemical maker BTP Plc in 2000. The company plans to reduce its product range by one quarter and cut 2,200 jobs through 2009. Basel, Switzerland-based Ciba, the largest maker of colors for plastics, sold its textile dyes unit to Huntsman in July.

"Clariant has streamlined its businesses, and it wouldn't make industrial or financial sense to sell some parts now," said Martin Flueckiger, an analyst at Helvea in Zurich with an "accumulate" rating on the stock. "The company has repeatedly said it wants to stay independent."

Clariant rose 30 centimes, or 1.5 percent, to 20.4 Swiss francs, valuing the company at 4.7 billion francs ($3.8 billion). Ciba shares rose 1.55 francs, or 1.9 percent, to 81.5 francs, valuing the company at 5.63 billion francs.

Huntsman, run from Salt Lake City and Houston, fell 30 cents, or 1.5 percent, to $19.30 on the New York Stock Exchange. The shares have gained 16 percent in the past 12 months.

The newspaper cited CEO Huntsman as saying he wouldn't make a hostile takeover.

"We've not been in contact with Ciba or Clariant about any proposed transaction," Stolle said. "What Peter Huntsman communicated in response to a question was that in the event that either Ciba or Clariant were to decide to sell one or more of their divisions, then Huntsman might be interested in taking a closer look."

Earlier this month, Huntsman acquired majority ownership of a Saudi Arabian joint venture that makes ingredients for construction products to boost sales in faster-growing markets.

"Any time that a significant company in our industry is interested in divesting off one of its businesses, we are always interested in taking a look," Stolle said. Ciba and Clariant "at this time pose no greater interest than any other company."

Ciba said in May that first-quarter profit more than doubled as it slashed 2,500 jobs to help lower costs. The company plans to save as much as 500 million francs by 2009 through cutting workers. Chairman Armin Meyer, who will step down from his second role as chief executive officer at the end of the year, has struggled to push through price increases needed to counter higher oil-based raw- material costs.

"Given their reorientation and the potential implications for the balance sheet, I don't see where they would add value for shareholders by selling other parts," said Flueckiger, who has a "neutral" rating on the company. Ciba isn't attractive at its current price, and Huntsman would have to generate substantial cost savings to justify a purchase, he said.

Clariant spokesman Walter Vaterlaus said the company hasn't been contacted by Huntsman. Ciba's Thomas Gerlach declined to comment.

"Ciba and Clariant can be successful alone, but the markets will continue to play them as takeover candidates," said Markus Mayer, an analyst at HVB Group in Munich.