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Huntsman and Clariant Call Off their Merger

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Oct. 31 2017, Updated 6:35 a.m. ET

Huntsman and Clariant end merger deal

On October 27, Huntsman (HUN) and Clariant announced that they mutually agreed to terminate a proposed merger of equals. The decision was approved by both boards. This decision to part ways was primarily due to the uncertainty of the approval from Clariant shareholders over the merger deal, as a few investors—including White Tale Holdings—opposed the merger transaction.

A joint statement by Peter R. Huntsman, president and CEO of HUN, and Hariolf Kottman, CEO of Clariant, said, “While we remain convinced that the proposed merger of equals as agreed to on May 21, 2017, is in the long term best interests of all of our shareholders, given the continued accumulation of shares by activist investor White Tale Holdings and their opposition to the transaction, now supported by some other shareholders, we believe that there is simply too much uncertainty as to whether Clariant will be able to secure the two-thirds shareholder approval that is required to approve the transaction under Swiss law.”

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The statement continued, “Under these circumstances and in light of the high level of disruption and uncertainty that has been created for both companies, we have decided jointly to terminate the merger agreement, stop the substantial expenditure of funds associated with integration planning, and proceed along our independent paths in the best interests of both companies and their shareholders, associates, and other stakeholders.”

Huntsman stock price

Huntsman stock remained positive with gains of 7.2%, and it closed at $31.06. The gains have resulted in the stock trading 16.0% above the 100-day moving average price of $26.77, indicating an upward trend in the stock. On a year-to-date basis, the stock has returned 50.90%. Analysts’ consensus projects further upside in the stock with a target price of $33.10. However, the 14-day relative strength index of 76 indicates that the stock has temporarily moved into an overbought situation and the stock may witness some selling pressure.

Investors looking for indirect exposure to Huntsman can invest in the First Trust Materials AlphaDEX Fund (FXZ), which has invested 2.20% of its portfolio in Huntsman. The fund also provides exposure to Westlake Chemical (WLK), LyondellBasell (LYB), and Eastman Chemical (EMN) with weights of 3.30%, 3.25%, and 2.60%, respectively, as of October 27.

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