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Mergers & Acquisitions

Clariant to sell masterbatch unit to PolyOne

$1.6 billion deal ends drama over what would become of the unit

by Marc S. Reisch
December 19, 2019

A photo of a Clariant masterbatch plant.
Credit: Clariant
A Clariant masterbatch plant in Mexico.

Clariant has agreed to sell its entire masterbatch business to PolyOne for $1.6 billion. The sale, expected to close by the end of September 2020, will end a drama over what would become of the business.

Masterbatches are plastic pellets full of color and additives that are added during polymer processing. The deal adds $1.2 billion in annual sales to PolyOne’s $2.9 billion in sales, creating a more-than-$4 billion polymer materials and services firm. The Clariant business includes 46 manufacturing and technology operations in 29 countries with about 3,600 employees.

PolyOne CEO Robert M. Patterson says the deal will be “transformational.” He adds that the firm expects about 85% of its earnings to come from specialty applications after the sale is completed, up from 66% in 2015.

For Clariant, the sale clears the way to concentrate on its personal and home care chemicals, catalysts, and natural resources businesses, says Executive Chairman Hariolf Kottmann. It also brings a turbulent period closer to an end.

The Swiss firm had planned to merge with Huntsman in 2017 but abandoned the deal because of opposition from activist investors. In January 2018, Saudi Arabia’s Sabic bought the activists’ 25% stake in Clariant for $2.4 billion.

The turbulence continued after Clariant and Sabic hatched a plan to move the high-value part of the masterbatch business into a materials joint venture with Sabic. They marked the standard masterbatch operation and Clariant’s pigment business for sale. Plans for the venture, which would have included Sabic’s Ultem and Noryl engineering polymer operations, fell apart at the end of July 2019. Sabic blamed deteriorating market conditions.

With the entire masterbatch operation now going to PolyOne, Clariant is reviving plans to pay shareholders a cash distribution—$1 billion—once the deal closes. Shareholders will vote on that proposal during the firm’s annual meeting at the end of March. Clariant expects to sell the pigment business by the end of 2020.



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