SABIC and Clariant to deepen alliance as regulators back stake deal

A man walks past the headquarters of Saudi Basic Industries Corp (SABIC) in Riyadh. (Reuters)
Updated 10 September 2018
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SABIC and Clariant to deepen alliance as regulators back stake deal

  • Deal rescues Clariant from hostile takeover
  • SABIC to become biggest shareholder in Swiss firm

ZURICH: Saudi Basic Industries Corp won regulatory approvals on Monday to buy a quarter of Swiss chemicals maker Clariant, cementing a partnership they hope will drive profit.
The world's fourth-largest chemicals maker said in January it was buying a 24.99 percent stake from activist investors, rescuing Clariant from a hostile takeover threat.
However, gaining a regulatory nod from countries including Mexico and Brazil has pushed back closure of SABIC's stock purchase by nine months.
But with this roadblock now cleared, Clariant Chief Executive Hariolf Kottmann plans a strategic update to tell shareholders how the combination will work.
SABIC sees Clariant as a stepping stone to diversifying its portfolio, which relies on commodity chemicals like fertilizers and polymers. Kottmann meanwhile aims to capitalise on opportunities in SABIC's 50-plus country network, to not only boost sales but reap savings on raw materials costs.
When the transaction closes on Thursday, SABIC will become Clariant's biggest shareholder, ahead of a German family group that has held about 14 percent since selling holdings in Bavarian-based Sued-Chemie in 2011.
The size and reach of the Saudis -- SABIC has $40 billion annual sales, six times Clariant's revenue -- could help the Swiss company lower costs for materials for its products, which include fire retardants which are dropped to tackle forest blazes and catalysts to speed up chemical reactions.
"On the sourcing side, Clariant could really benefit," Zuercher Kantonalbank analyst Philipp Gamper said. "With its extensive business connections it will also open up sales opportunities."
Clariant shares were up 1.3 percent at 1100 GMT. They have fallen 12.7 percent this year, as the arrival of SABIC as an anchor shareholder dented hopes of a takeover or break-up.
SABIC shares, which have risen by about 17 percent this year, were down 1 percent.
While SABIC has said it has no plans to buy a majority holding, its deepening union with Clariant has prompted speculation that managers in Riyadh will eventually assert more control. Sources have said no move is imminent, although SABIC is unlikely to just sit on its 25 percent holding.
SABIC has long been a Clariant customer and the two have a plant design joint venture called Scientific Design, which generates shared revenue of about $80 million annually.
Yousef Al-Benyan, SABIC's CEO said the companies knew each other and had worked well together for many years.
"This investment is in line with SABIC’s strategy of product diversification...and becoming a global leader in the specialties sector," he said.


Amazon strengthens ties with French food retailer Casino

Updated 23 April 2019
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Amazon strengthens ties with French food retailer Casino

  • The move could re-ignite speculation of a bigger deal later on
  • The extended partnership comes as Casino is selling assets and cutting debt to try to allay investor concerns

PARIS: E-commerce giant Amazon and French retailer Casino are expanding their partnership, with Amazon installing pick-up lockers in Casino stores and more of the French company’s products to be available on Amazon.
The move, which follows an initial co-operation between Casino’s upmarket Monoprix supermarket chain and Amazon in Paris, could re-ignite speculation of a bigger deal later on.
An Amazon spokeswoman said it had a policy of not commenting on market speculation. Amazon’s purchase of bricks-and-mortar US food retailer Whole Foods Market last year has raised speculation it could seek to buy a European food retailer.
The extended partnership comes as Casino is selling assets and cutting debt to try to allay investor concerns over its finances and those of parent company Rallye.
The deal, unveiled on Tuesday, will see Amazon lockers installed in 1,000 locations across France in nine of Casino’s brands, including Monoprix, Monop, Geant, Hyper Casino, Casino Supermarche, Leaderprice, Viva and Spar by the end of the year. The lockers store Amazon products to be picked up by customers.
More Casino-branded products will also be available on Amazon, while Amazon and Monoprix will extend their partnership on Amazon’s Prime Now grocery delivery service outside Paris and into new cities in the next twelve months.
“This announcement represents a new step in strengthening Casino’s omnichannel strategy to always be a little more in the heart of consumers’ lives,” said Casino’s chief executive Jean-Charles Naouri in a statement.
Monoprix, seen by analysts as similar to Whole Foods, started filling orders for subscribers to Amazon’s Prime loyalty program in parts of Paris last September.
This partnership has been closely watched as Monoprix was the first French retailer to agree in March 2018 to sell products via Amazon, causing a stir in the fiercely competitive domestic market.
France is Amazon’s third largest market in Europe, after Britain and Germany. Amazon is the e-commerce leader in France with a market share of 17.3 percent, but its grocery market share stands at just 2 percent, according to Kantar data.
The US group, which has run its Amazon Prime express delivery service in Paris since 2016, has made no secret of its desire to launch a grocery delivery service in France as part of its ambitions to expand in food retail.
But the French supermarket sector has powerful incumbents such as Carrefour and Leclerc, operating at low margins and with a dense network of stores.
Earlier this week, Casino said it would sell 12 Casino hypermarkets and 20 supermarkets to Apollo Global Management in a deal worth up to €470 million ($529 million).