By John Miller
ZURICH (Reuters) - Activist investor Keith Meister's Corvex hedge fund and New York's 40 North said on Tuesday they had taken a 7.2 percent stake in Clariant (S:CLN) and oppose the Swiss chemical maker's planned merge with Huntsman Corp (N:HUN).
"There are excellent opportunities to unlock value from the many high quality businesses that currently comprise Clariant," a spokesman for White Tale, the vehicle they created to take the stake, said.
"Unfortunately, we do not believe that the proposed merger with the Huntsman Corporation is one of those options."
Meister, a Carl Icahn protege, with Corvex manages assets worth $6 billion (4.64 billion pounds) and took a 5.5 percent stake in communications company Century Inc (N:CTL) earlier this year.
40 North, run by New York real estate investor David Winter and former Bear, Stearns & Company financial analyst David Millstone, previously held a stake in Clariant before linking with Corvex in their bid to overturn the Huntsman deal.
Clariant, which on Tuesday noted the increased investment by Corvex without addressing Corvex's opposition to the merger, said it has been in contact with the hedge fund since last year when it initially took a stake.
"As with all our shareholders we maintain an open dialogue with them," a Clariant spokesman said.
Huntsman did not return a phone call seeking immediate comment.
Clariant and Huntsman in May announced a merger valued at around $20 billion including debt in which Clariant shareholders would hold 52 percent of the combination.
At the time, they talked up the friendship between chief executives Hariolf Kottmann and Peter Huntsman as well as prospects for faster growth for the combined company as rationale for "a merger of equals".
The deal, creating a company with about $13 billion in annual sales, had the support of German families that own almost 14 percent of the Swiss group.
CONGLOMERATE DISCOUNT
Some analysts said the transaction makes sense, in particular after Huntsman spins off its Venator materials segment in an IPO.
"Huntsman’s portfolio, after the pending Venator spin-off, offers a highly complementary growth portfolio, in our view - complementary in a way that it puts both companies on a sounder, broader footing," Kepler Cheuvreux's Christian Faitz said.
Still, Corvex and 40 North contend the transaction lacks strategic rationale and runs against Clariant's strategy of becoming a pure-play specialty chemicals company.
"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.
"Shareholders ought to reject this value destructive merger," they said.
No date has yet been set for shareholders to vote on the merger, a spokesman for Clariant said.
Clariant shares were up 3 percent and Huntsman was up 1.6 percent on Tuesday following news of the stake purchase.
Clariant shares have risen nearly 6 percent since the merger was announced. Huntsman stock have fallen 1.25 percent.