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.


Mike Pompeo on China trade war: ‘We are going to win’

Updated 23 September 2018
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Mike Pompeo on China trade war: ‘We are going to win’

NEW YORK: Secretary of State Mike Pompeo vowed that the United States would emerge victorious in an intensifying trade war with China, a day before Washington imposes $200 billion worth of tariffs.
“We are going to win it,” Pompeo said in an interview on Fox News broadcast Sunday.
“We’re going to get an outcome which forces China to behave in a way that if you want to be a power — a global power — transparency, rule of law, you don’t steal intellectual property,” he said.
Pompeo said that President Donald Trump “very much likes” his Chinese counterpart Xi Jinping but said he would press policies that “the American workers deserve.”
Even before Trump’s election, the United States has complained vigorously that China has been unfair to US businesses and has stolen technology by forcing firms to reveal secrets as a condition to operate in the fast-growing Asian economy.
But Trump has taken an increasingly hard line on trade around the world, with $200 billion in tariffs on Chinese exports set to take effect on Monday.
China has retaliated by hitting $60 billion in US products and the world’s two largest economies have already imposed tariffs of $50 billion on each other.
In a first, the Trump administration has also punished a unit of China’s defense ministry for buying fighter jets and missiles from Russia in defiance of sanctions on Moscow.