Clariant merger Finding the Right Chemistry

Swiss chemical company Clariant’s chief executive Hariolf Kottmann has fought off a takeover attempt and is now open for an alliance in the sector.
Clariant is in the mood for a merger.

 

Clariant, the Swiss specialty chemicals company, is headed by Hariolf Kottmann. In an interview, he talked mergers, chemicals and China.

 

Mr. Kottmann, in March of this year Clariant was reportedly going to be taken over by the chemical company Evonik. Did you ever hear anything from Evonik’s CEO Klaus Engel?

No, neither before nor after the news – it may be that Evonik was interested. There weren’t any talks, and there won’t be any either, with Evonik or with others. There was also talk of BASF as a potential buyer.

Clariant has been considered a candidate for takeover ever since you spent years putting it back on its feet. Why are you resisting?

The current management is achieving sufficient added value for shareholders, customers and employees. We do not want to disappear into the middle levels of some large company.

When it comes to profit margin, measured by sales revenue, Clariant is somewhat behind Evonik or BASF. Haven’t you already given up on the target of 17 percent for 2015?

Unfortunately, we aren’t yet where we’d like to be, but there are still efficiency reserves. The company is striving for a profit margin in the range of 16 to 19 percent in the next few years. This year, we don’t expect it to make 17 percent, but 15 percent.

So anybody who really wants Clariant is going to have to initiate a hostile takeover?

Or to negotiate in a coordinated way with us, if they want to merge with us. I’m obviously talking with many colleagues and sounding out options. We will look at mergers if it would mean we could strengthen our business with catalysts, maintenance products or goods for the oil, gas and mining industries. But that wouldn’t be through a merger with BASF or Evonik…

… but rather a mid-sized company such as the British specialized chemical company Croda or the Belgian catalyst specialist Umicore?

I won’t name any names.

Are you also planning some acquisitions?

Yes, we have a list of 30 projects. They are smaller projects worth up to about €150 million. We want to complete some deals this fall.

You will phase-out your low-margin plastics and coatings business by January 1. When will the sale take place?

From the present perspective, I am ruling out that we will sell this business in the next three to five years. The idea behind the phase-out was to have division managers think more entrepreneurially in the future and to provide cash to the other business areas. We would even like to make additional purchases there, and a joint venture would be conceivable. What is critical is that candidates agree that hostile takeovers are taboo.

Clariant is the world market leader in pigments. Are you already in negotiations with BASF, which wants to phase-out its pigment business?

No. We do not want to make additional purchases of this size, about €1 billion annual sales. Pigments are a highly competitive business.

How is the crisis in China affecting you?

Our sales there are shrinking, but we will increase investment. China remains important and needs chemicals for further prosperity. The country’s annual growth will be lower in the future.

This article first appeared in German business magazine WirtschaftsWoche. To contact the author: [email protected]