Chemical giants Huntsman and Clariant are combining in an all-stock deal

Huntsman Corporation and Clariant AG have reached a merger agreement in an all-stock deal set to create a specialty chemical company with approximately $20 billion enterprise value.

The merged company, which is going to be named HuntsmanClariant, will be 52% owned by Clariant shareholders, according to a statement by the Swiss company.

The deal is expected to generate more than $400 million in annual cost savings, leading to $3.5 billion in value creation.

Huntsman, a leading US manufacturer and marketer of chemical products, is merging with its Swiss rival Clariant. Combined, the two companies would manufacture chemicals, coatings for markets all over the globe with a workforce of around 32,000.

Growth in the chemicals industry has slowed down over the past few years and there’s been increasing consolidation in the sector as a means of cutting costs.

Other notable transactions in the sector include deals between Dow Chemical and DuPont and Bayer and Monsanto.

“This is the perfect deal at the right time. Clariant and Huntsman are joining forces to gain much broader global reach, create more sustained innovation power and achieve new growth opportunities,” said Hariolf Kottmann, CEO of Clariant.

“This is in the best interest of all of our stakeholders. Peter Huntsman and I share the same strategic vision and I look forward to working with him.”

Peter R. Huntsman, President and CEO of Huntsman, commented: “I could not be more enthusiastic about this merger and look forward to working closely with Hariolf Kottmann, a man I have admired and trusted for the past decade. We also look forward to a close association with his immensely talented colleagues around the world. Together, we will create a global leader in specialty chemicals with a combined balance sheet providing substantial financial strength and flexibility.”

Peter Huntsman will become chief executive of the combined business, while Hariolf Kottmann will serve as chairman.