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What’s the FTC’s Stance on the Huntsman-Clariant Merger?

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Aug. 21 2017, Published 9:43 a.m. ET

Huntsman-Clariant merger

On August 15, 2017, Huntsman provided an update on its merger with Clariant. Huntsman said that it’s on track to meet the regulatory conditions required to complete the merger. However, the FTC (Federal Trade Commission) requested that Huntsman provides information on two products— sodium isethionate and polyetheramine. Sodium isethionate is used in soaps and shampoos, while polyetheramine is used in construction, paint, additive, and ink applications. According to Huntsman, the revenue generated from the products was less than $20 million. Huntsman thinks that the revenue shouldn’t cause any concerns about the deal.

The merger between Huntsman and Clariant is expected to bring synergies of $400 million in the form of cost savings and could create a value of $3.5 billion. The deal has been valued at $20 billion and will be an all-stock transaction. The deal is expected to close by the end of fiscal 2017.

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Huntsman’s stock performance

Huntsman stock closed the week ending August 18 on a positive note with a gain of 0.8% and closed at $25.34. Higher stock prices helped the stock trade just above the 100-day moving average price of $25.29. On a year-to-date basis, the stock has returned 32.80%. Analysts see more upside in the stock with a target price of $29.88, which implies a return potential of 18% above the closing price as of August 18. Huntsman’s relative strength index of 43 indicates that the stock isn’t overbought or oversold.

Investors looking for exposure to Huntsman can invest in the First Trust Materials AlphaDEX Fund (FXZ). FXZ has invested 2.30% of its portfolio in Huntsman. The fund also provides exposure to Westlake Chemical (WLK), Eastman Chemical (EMN), and LyondellBasell (LYB) with weights of 3.50%, 2.60%, and 2.70%, respectively, as of August 18, 2017.

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