SABIC ups stake in Clariant to 31.5%, inches closer to mandatory takeover offer

ICIS
03 MAR 2020

SABIC has increased its stake in Clariant to 31.5%, the Saudi-Arabia-headquartered petrochemicals major said on Tuesday, close to the level that would trigger a mandatory takeover offer.

Shares in the Switzerland-headquartered specialties player rose over 4.5% in Tuesday afternoon trading after news emerged that SABIC had upped its holding in the company from 24.99%, according to a filing on Saudi Arabia’s Tadawul bourse.

According to Swiss securities law, an investor increasing its stake in a publicly-traded company to over a third triggers a mandatory takeover offer.

SABIC itself is in the process of being acquired by Saudi state oil and gas major Saudi Aramco.

Aramco, which listed a small chunk of its equity in an initial public offering (IPO) in December, said on 1 March that it has received European Commission approval for the takeover.

TAKEOVER TARGET
SABIC ramping up its holding in Clariant positions the business as one of the most likely takeover targets in the European chemicals sector, according to analysts at Baader Bank.

Despite the collapse of plans to merge the company’s pigments and masterbatches unit with SABIC’s specialties operations in a joint venture Baader had described at the time as a “wedding gift” to Clariant.

However, the Swiss producer later announced plans to sell the masterbatches unit to PolyOne in December 2019.

The company is also selling its healthcare business to Arsenal Capital Partners and has more divestments planned, according to Clariant management, as it moves to focus on its core business units of care chemicals, catalysts and natural resources products.

The divestments could produce higher-than-expected multiples for Clariant, according to Baader, and the restructure should leave it with a strong catalysts pipeline and improve margins toward mid-term targets, which the market has been sceptical of, it added.

“Clariant remains among the most likely takeover targets in the EU chemicals space,” Baader said in an investor note.

SABIC shares closed up 5.25% on Tuesday.