Huntsman reacts to White Tale Holdings comments on merger with Clariant

Huntsman Corporation issued on September 20, 2017 the following statement in response to the public letter from White Tale Holdings, a Cayman Islands based investment vehicle controlled by short-term oriented hedge funds, 40 North and Corvex, which invested in Clariant only after the merger announcement, and now holds a stake in Clariant in excess of 15%.

Peter Huntsman, President and CEO, commented: “White Tale has resorted to demonstrably false attacks on Huntsman’s performance and its portfolio in a transparent and self-serving attempt to derail our strategic merger of equals with Clariant.  In an apparent effort to engineer a short-term rise in the Clariant stock price, White Tale has advanced a destructive, high risk strategy of dismantling Clariant and denying all other stakeholders of the company the sustainable, long-term benefits of this compelling combination.

“White Tale’s attacks on Huntsman are false.  Since March 2016, when Huntsman communicated our strategy at our investor day, we have delivered more than we promised:  free cash flow in excess of our peers and more than USD 2 billion of deleveraging, the separation of our Pigments and Additives business, and significant growth in our downstream specialty and differentiated businesses. Our total shareholder return over that time has been above 150 %, which is far more than Corvex has delivered to its investors.  Instead of questioning Clariant’s motivations, Clariant investors should ask why Corvex has lost billions of funds under management in recent years and returns have been poor. “I have not met with White Tale and have no intention to do so. Their activism is all about the short-term, break-up value of Clariant and is not about Huntsman.”

Huntsman has transformed into a focused specialty and differentiated chemical company.  Through aggressive portfolio management, Huntsman’s has become, with few exceptions, a specialty chemical business. Less than 10 % of Huntsman’s EBITDA now comes from lower margin, commoditized businesses. There is thus no doubt that both Huntsman and Clariant have specialty businesses that deliver high-growth and high-margins; in this most recent quarter, both companies’ adjusted EBITDA margins were approximately 15 %, and the combined business margin, including synergies, is expected to be above 17 %, higher than either business is expected to achieve alone.

Huntsman has delivered long-term and sustainable value to its stockholders and Corvex has not.  Huntsman has displayed a strong ability to build leading specialty and differentiated chemical platforms and create significant long-term value by integrating attractive businesses through acquisitions and strategic investments.  The Company’s acquisition of the Rockwood businesses demonstrated just that. When Corvex took a position in Huntsman stock in 2013, they urged Huntsman to divest its small, commoditized pigments business in to a market with few buyers and no public option.  Instead of capitulating to Corvex’s threats, Huntsman invested in the business to create the option it recently exercised—the IPO of Venator with a market valuation of approximately USD 3 billion, a delivery of USD 1.5 billion in incremental value to shareholders.

Like it did in 2013, Corvex is resurrecting the self-serving playbook from its widely-criticized ADT investment – pushing for Clariant to undertake short-sighted financial engineering apparently in order to deliver a short-term rise in the stock price into which it then sells its stake, leaving the long-term shareholders to pick up the pieces after it’s gone.

Huntsman has a strong operational track record. Huntsman has a proven track record for taking costs out of its businesses and generating operational efficiencies, most recently demonstrated by its transformation of the Rockwood businesses acquired in 2014 where more than USD 200 million in costs were taken out without any negative impact on safety, as well as the successful transformation of both its Advanced Materials and Textile Effects businesses, where in excess of another USD 200 million in costs were eliminated.  In the past two years alone, Huntsman has paid down more than USD 2 billion of its debt and remains focused on cash generation, kicked off the successful separation of its Pigments and Additives Division, creating a publicly traded company worth approximately $3 billion and grown its differentiated businesses through bolt-on acquisitions and strategic investments.

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2016 revenues of approximately USD 10 billion. Our chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets. We operate more than 75 manufacturing, R&D and operations facilities in over 30 countries and employ approximately 10000 associates within our four distinct business divisions.