Activist group doubles Clariant stake as it seeks to stop merger
Corvex and allies oppose plan to combine Swiss chemicals group with US rival Huntsman
An activist investor group that includes Keith Meister’s Corvex hedge fund has increased its stake in Swiss chemicals group Clariant to 15.1 per cent and repeated demands that it drop a planned $20bn tie-up with Huntsman Corp of the US.
White Tale Holdings, which is composed of Corvex and a fund called 40 North, made the declaration in an open letter to Clariant on Tuesday that reiterated claims that the proposed all-stock merger had “no strategic merit”, would destroy shareholder value and significantly undervalued the Swiss company.
“As you know, we have attempted to work constructively with you and your advisers over the past two months, out of the public spotlight, to better understand the board’s questionable logic in pursuing Clariant’s proposed merger with [Huntsman],” the letter to Clariant’s board said. “Unfortunately, we remain convinced, and increasingly so, that the proposed merger is detrimental to Clariant shareholders.”
The move marked the latest attack by the shareholder group, which is now the largest investor in Clariant. It began its public campaign in July when it disclosed a 7.2 per cent holding.
Clariant needs to win approval of the deal from two-thirds of those shareholders who attend a general meeting, which is expected to be held in the coming months. Given that not all shareholders attend such meetings, White Tale could seek to block a deal if it accumulates a sufficient amount of shares itself or convinces enough of Clariant’s other holders to also oppose the transaction.
One analyst following the situation closely said that the activist group has had trouble in finding support for its campaign from other Clariant shareholders and has been forced to increased its stake to keep any hopes alive of blocking the deal, which was announced in May. This person added that White Tale had failed to put forward any viable alternatives for Clariant in lieu of the merger, which has blunted the power of its argument.
Several European investors have told the Financial Times that they would prefer to see Clariant acquired at a premium by a rival such as Germany’s Evonik and that they are not convinced that the deal has much industrial logic. But they added that they did not think Clariant’s management would be open to a takeover and that the White Tale campaign had not gained much traction in recent months.
Earlier this month, Peter Huntsman, the US group’s founder, told the Swiss newspaper NZZ am Sonntag that he had met between 150 and 200 Clariant shareholders. “The large majority are behind us,” he said.
In its letter, White Tale claimed the Huntsman deal would mark a shift in strategy and lead Clariant to change from a pure-play specialty chemicals company to an “unfocused and commodity-oriented business with increased volatility and a lower market multiple”.
It alleged that Clariant’s board has not “seriously explored alternative measures or transactions to maximise shareholder value in advance of agreeing to merge with Huntsman”.
White Tale also argued that much of the synergies from a Huntsman deal could be achieved through a “robust cost optimisation plan” at Clariant without having to give almost half of that value to Huntsman shareholders.
Clariant’s shares, which have risen 42 per cent over the past year, were up a further 0.4 per cent at SFr23.89 by lunchtime in Europe on Friday.
Michael Kors upgrade details -- to Outperform at Oppenheimer; tgt raised to $55 (44.65)
Oppenheimer upgrades KORS to Outperform from Perform and raises their tgt to $55 from $44. In the last 2+ years, valuation stayed cheap (10-11x P/E) as profitability kept eroding (EBIT margins declined from 30% in '14 to 16.5% this year); now with AUR up for the first time in F1Q18 (in both Wholesale and Retail), margins seem to be finding the bottom, while sentiment is extremely negative (three Outperform, 16 Neutral/Underperform ratings). While firm remains wary on N. Am. Wholesale reset (28% of sales significant vs. 40% four years ago), Retail beat last quarter (in N. Am. and Europe) as improved product is resonating at full price; they think ests are poised for upside, with GMs inflecting (COH's profitability troughed at 17%-18%)
Gapping down
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- APOG -2.2%
M&A news:
- SNCR -18.8% (Siris Capital Group affirms 12.93% active stake, informs the Company that they are no longer interested in pursuing an all-cash acquisition of the Company and, accordingly, the indication of interest set forth in the June 22 Letter is withdraw)
Other news:
- FOMX -11.6% (Foamix director and advisor entered into an individual share trading plan in accordance with Rule 10b5-1)
- MDWD -9.9% (prices underwritten public offering of 4,400,000 of its ordinary shares at a price to the public of $5.00/share)
- MUX -8.6% (announces bought deal of $40.5 mln -- includes 18 mln shares and warrants to buy up to 9 mln shares at $2.25 per share and associated one-half common stock warrant)
- SUPN -7.4% (announced the outcome of the planned interim analysis from the first Phase III clinical trial on SPN-810; says lower dose of SPN-810 trial will be eliminated)
- BECN -4.7% (commences $300 mln common stock offering; also files for common stock shelf offering )
- HAS -2.4% (continued weakness on Toys R Us bankruptcy)
- EFX -1.8% (pulling back in after hours trade on reports that the company had security breach earlier than disclosed)
- PAA -1.3% (Valero Energy and Plains All American Pipeline (PAA) mutually agreed to terminate agreement providing for the acquisition by a subsidiary of Valero of two petroleum storage and distribution terminals)
- BEAT -1.3% (continued weakness; also Board of Directors determined that the Company hold an advisory vote to approve executive compensation annually until the next required stockholder vote on the frequency of such votes)
- FRSH -1.1% (appoints CFO Mark Hutchens as COO effective immediately; Hutchens will continue in his role as CFO until a qualified replacement is found)
Analyst comments:
- UAA -2.9% (downgraded to Underperform from Market Perform at Wells Fargo)
- DMTX -1.7% (downgraded to Sell from Neutral at Citigroup)
- NKE -1.5% (downgraded to Neutral from Positive at Susquehanna)
- TSLA -0.9% (initiated with a Underperform at Jefferies)
Gapping up
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- SCS +6.6%, AZO +2.6%
M&A news:
- BOBE +5.7% (Post Holdings (POST) to acquire Bob Evans Farms for $77.00/share)
- RAD +2.2% (confirms regulatory clearance for an amended and restated asset purchase agreement with Walgreens Boots Alliance (WBA))
- JONE +1.4% ( Fir Tree Partners calls on Jones Energy to pursue value-maximizing strategic alternatives)
Other news:
- STAF +62.1% (refinances balance sheet, announces closing of two acquisitions)
- PRQR +5.9% (announces that investigational drug QR-313 for dystrophic epidermolysis bullosa has received orphan drug designation from the FDA)
- REXX +5.5% (provides an update for its Moraine East Area operations, remains on target to meet its Q3 production guidance of 171.0 -- 181.0 MMcfe/d and its FY 17 exit rate production growth rate guidance of 15% - 20%)
- DRNA +5% (Bain Capital Life Sciences Fund discloses increased active stake),
- NBRV +5% (continued strength; also commences an underwritten public offering of $80.0 mln of ordinary shares)
- UBNT +3.2% (adds $100 mln to repurchase program, updates Q1 guidance, reaffirms FY18 outlook)
- NOMD +3.1% (Elliott Associates discloses 5.7% passive stake)
- KTOS +2.1% (Kratos Defense and Security deploys the World's First autonomous vehicle approved and supporting live roadway operation in Colorado )
- SINA +1.7% ( Aristeia Capital confirms has nominated two independent candidates for election to Sina's Board to immediately evaluate and help execute opportunities)
- FOLD +1.7% (FDA has granted Fast Track designation for the oral precision medicine migalastat)
- M +1.4% (Macy's details plans to hire approximately 80,000 seasonal associates)
Analyst comments:
- MRTX +4.6% (initiated with a Outperform at Oppenheimer)
- QDEL +3.9% (upgraded to Overweight from Neutral at Piper Jaffray)
- KORS +3% (upgraded to Outperform from Perform at Oppenheimer)
- GPS +2.2% (upgraded to Neutral from Underperform at Credit Suisse)
- ACIA +1.9% (initiated with a Buy at MKM Partners)
- MLCO +1% (upgraded to Buy from Neutral at Nomura)
- NTAP +0.9% (upgraded to Buy from Neutral at UBS)
- AAPL +0.5% (target raised to $194 from $182 at Morgan Stanley)