Clariant, SABIC to deepen alliance as regulators back stake deal
* SABIC wins nod to buy quarter of Clariant
* Clariant CEO promises strategic update 'in due course'
* Swiss firm hopes to cut costs, SABIC seeks diversification
(Adds detail, background)
By John Miller
ZURICH, Sept 10 (Reuters) - Saudi Basic Industries Corp
won regulatory approvals on Monday to buy a quarter of
Swiss chemicals maker Clariant, cementing a partnership
they hope will drive profit.
The world's fourth-largest chemicals maker said in January
it was buying a 24.99 percent stake from activist investors,
rescuing Clariant from a hostile takeover threat.
However, gaining a regulatory nod from countries including
Mexico and Brazil has pushed back closure of SABIC's stock
purchase by nine months.
But with this roadblock now cleared, Clariant Chief
Executive Hariolf Kottmann plans a strategic update to tell
shareholders how the combination will work.
SABIC sees Clariant as a stepping stone to diversifying its
portfolio, which relies on commodity chemicals like fertilizers
and polymers. Kottmann meanwhile aims to capitalise on
opportunities in SABIC's 50-plus country network, to not only
boost sales but reap savings on raw materials costs.
When the transaction closes on Thursday, SABIC will become
Clariant's biggest shareholder, ahead of a German family group
that has held about 14 percent since selling holdings in
Bavarian-based Sued-Chemie in 2011.
The size and reach of the Saudis -- SABIC has $40 billion
annual sales, six times Clariant's revenue -- could help the
Swiss company lower costs for materials for its products, which
include fire retardants which are dropped to tackle forest
blazes and catalysts to speed up chemical reactions.
"On the sourcing side, Clariant could really benefit,"
Zuercher Kantonalbank analyst Philipp Gamper said. "With its
extensive business connections it will also open up sales
Clariant shares were up 1.3 percent at 1100 GMT. They have
fallen 12.7 percent this year, as the arrival of SABIC as an
anchor shareholder dented hopes of a takeover or break-up.
SABIC shares, which have risen by about 17 percent this
year, were down 1 percent.
While SABIC has said it has no plans to buy a majority
holding, its deepening union with Clariant has prompted
speculation that managers in Riyadh will eventually assert more
control. Sources have said no move is imminent, although SABIC
is unlikely to just sit on its 25 percent holding.
SABIC has long been a Clariant customer and the two have a
plant design joint venture called Scientific Design, which
generates shared revenue of about $80 million annually.
Yousef Al-Benyan, SABIC's CEO said the companies knew each
other and had worked well together for many years.
"This investment is in line with SABIC’s strategy of product
diversification...and becoming a global leader in the
specialties sector," he said.
(Reporting by John Miller; Editing by Sunil Nair/Kirsten
© 2018 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.