Activist Investor Keith Meister Is Holding a $20 Billion Deal to Ransom

July 4, 2017, 9:09 AM UTC

Corvex, the hedge fund run by activist investor Keith Meister, has thrown a wrench into the planned $20 billion merger of plastics and rubber products maker Huntsman (HUN) with Swiss-based Clariant (CLZNY).

Corvex has teamed up with the investment arm of roofing maker Standard Industries to have teamed up to take a 7.2 percent stake in Clariant, saying the terms of Huntsman’s proposal grossly undervalues the Swiss company.

“There are excellent opportunities to unlock value from the many high-quality businesses that currently comprise Clariant,” a spokesman for White Tale, a company Corvex and Standard Industries created to buy the Clariant stake, said Tuesday.

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“Unfortunately, we do not believe that the proposed merger with the Huntsman Corporation is one of those options.”

Keith Meister, a protégé of investment guru Carl Icahn, manages assets worth $6 billion and took a 5.5 percent stake in communications company CenturyLink Inc earlier this year. Standard is the largest North American roofing manufacturer and through its investment arm, 40 North, previously held a stake in Clariant before linking with Corvex to overturn the Huntsman deal.

Standard Industries’ co-CEO, David S. Winter, is a scion of a wealthy New York City real estate dynasty.

Clariant didn’t immediately respond to phone calls and email requests for comment.

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In their merger pact announced in May, Huntsman and Clariant said the combination would be 52 percent owned by Clariant shareholders and valued at around $20 billion including debt.

Clariant and Huntsman have previously talked up the personal friendship between their chief executives, Hariolf Kottmann for the Swiss company and Peter Huntsman for the U.S. firm, as well as prospects of faster growth for the combined company as rationale for what was dubbed “a merger of equals.”

While the Clariant-Huntsman deal had the support of a group of German families that own almost 14 percent of the Swiss group, Corvex and 40 North said the transaction lacks strategic rationale and runs against Clariant’s strategy of becoming a pure-play specialty chemicals company.

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“By merging with Huntsman, Clariant will be exchanging almost half its shares for what is primarily a commodity and intermediates business which will further dilute its multiple and create a larger conglomerate discount,” the White Tale spokesman said.

The deal is one of a number of transatlantic mergers to run into trouble this year. Pittsburgh-based PPG industries was forced to abandon its efforts to take over Dutch paint and coatings group Akzo Nobel, while Kraft Heinz, owned by the acquisitive private equity group 3G, was also rebuffed in a bid for consumer goods giant Unilever.