Clariant, Sabic drop joint venture talks

Just one day after Ernesto Occhiello unexpectedly resigned as CEO of Clariant, Clariant and Sabic said they are suspending discussions on the formation of a high-performance materials joint venture.

In a July 25 announcement, Switzerland-based Clariant cited deteriorating market conditions for the suspension. Talks will resume when conditions improve, Sabic CEO Yousef Abdullah Al-Benyan says, according to news service Reuters.

If they resume, the discussions are likely to concern a very different venture: Clariant now says it will sell its high-value masterbatch portfolio, once intended to be part of the deal.

Proceeds from the sale of that business—along with standard masterbatch and pigment businesses already marked for sale—will fund investments in new technology for core specialty businesses such as care chemicals and catalysts, Clariant says, and help strengthen its balance sheet. The company adds that it will also return some of the proceeds to shareholders.

The suspension of talks with Sabic is just the latest setback for Clariant, which has been going through a turbulent period. In 2017, the companyended talks on a $20 billion merger with Huntsman Corp. because of opposition from the activist investors White Tale Holdings and 40 North. Sabic bought the investors’ 25% stake in Clariant in January 2018 for $2.4 billion.

Sabic and Clariant first started talks to set up the materials joint venture in September 2018. The plan was to create a business with $3.2 billion in annual sales by combining Clariant’s polymer additives and high-value masterbatch business with Sabic’s Ultem and Noryl engineering polymer operations and its LNP compounded polymer unit.

Occhiello joined Clariant as CEO in October. He appeared to be just the person for the job, as he had previously headed Sabic’s specialties business. Among his responsibilities was setting up the materials joint venture. With Occhiello now gone after just 10 months on the job, Clariant chairman Hariolf Kottmann will take on CEO duties until the firm finds a successor.