Following a supervisory board meeting and a first face-to-face encounter with activist investor White Tale last week, Swiss specialty chemicals producer Clariant said it would proceed with management’s plan to “define a concrete set of measures, including M&A activities, to enhance value creation.” Details are to be presented to shareholders at the beginning of 2018.

Implementation of the corporate strategy as well as further value creation would have been enhanced by the previously planned merger with Huntsman, Clariant said. The combination of the two chemicals players would have generated more than $3.5 billion of shareholder value through the realization of “massive synergies and a promising optionality from a portfolio and capital strength perspective,” the Swiss group added.

In a statement, Clariant said its management is “fully aware” that the new situation following the termination of the Huntsman merger “will require additional efforts to update the strategy, which will now be implemented on an accelerated basis.” The merger plans were abruptly canceled in late October for fear White Tale would pull other shareholders over to its side. This could have led the approval ratio to fall short and triggered a break-up fee.

The acquisition vehicle of two New York hedge funds Corvex and 40 North, which together hold about 20% of Clariant’s capital, had claimed that the Swiss company would be worth more on its own. White Tale had also called for the divestment of the Plastics and Coatings business, with the proceeds to be reinvested in “pure-play” specialty chemicals businesses.

At its meeting with the investors, the chemical producer said its board had “unanimously rejected” White Tale’s call for an independent strategic portfolio  review, as it “perceives this process to be merely focused on finding bidders for various businesses with the ultimate consequence of breaking up the company and selling the assets.”

Late in the game, activist investors also put pressure on merger partners Dow and DuPont to conduct a portfolio review with the aid of consultants McKenzie. This delayed conclusion of the transaction and forced a reshuffle of assets among the three standalone companies planned to result from the fusion.

“In the spirit of being open to major shareholders’ suggestions and with specific respect to White Tale’s request,” Clariant said its board has offered the hedge funds the option to initiate a registration process to propose one additional member at the upcoming March 2018 annual general meeting. This, it said, will give all shareholders the opportunity to vote on the investor’s application to serve on the board.

The company said it has also repeated its offer for White Tale to sign a non-disclosure agreement, which would legally enable it to gain more insight into Clariant’s current strategy.

As the legacy shareholders of Süd-Chemie, representing about 15% of the outstanding shares, as well as the vast majority of institutional shareholders, unanimously support management’s strategy, Clariant said it believes it has a “broad global backing.”  Süd-Chemie, based in southern Germany, was acquired by the Swiss specialty chemicals producer in 2011.