Clariant makes a step change into higher value specialties
Clariant, a world leader in specialty chemicals, today announced an updated strategy and financial outlook as well as the signing of a Memorandum of Understanding with SABIC on a significant collaboration opportunity between the two companies in the area of high performance materials. The Group intends to expand more strongly by focusing on customer-specific products and solution offerings with attractive growth prospects and above average value potential.

Clariant, a world leader in specialty chemicals, today announced an updated strategy and financial outlook as well as the signing of a Memorandum of Understanding with SABIC on a significant collaboration opportunity between the two companies in the area of high performance materials. The Group intends to expand more strongly by focusing on customer-specific products and solution offerings with attractive growth prospects and above average value potential. By 2021, following the creation of High Performance Materials and the divestment of the remaining Plastics & Coatings Business Area, Clariant expects to deliver significantly higher sales of around CHF 9 billion and an EBITDA margin of approximately 20 % with an operating cash flow of more than CHF 1.2 billion.

"The portfolio upgrade together with the continuation of Clariant's strategy enables the Group to realize a significant step change into higher value specialties, which will allow the Group to considerably augment value creation for all our stakeholders", said Hariolf Kottmann, CEO of Clariant. The intended combination of Clariant's Additives and high value Masterbatches (color, high temperature resins and health care) and parts of SABIC's Specialties business will create a uniquely positioned provider of highly customer-specific high performance materials and solutions under the name High Performance Materials.

This new Business Area will offer a customer-specific, application know-how driven and competitively advantaged product range of highperformance thermoplastics for demanding thermo-electro-optical and mechanical environments, specialty additives and masterbatches in tandem with an outstanding global compounding platform. Major applications include smart electronics, health care, aerospace, automotive, robotics, additive manufacturing, renewable energy, and e-mobility. These applications demand the fulfillment of stringent customer specifications which require exclusive technology and formulation know-how.

The combination of Clariant's and SABIC's offerings within Clariant is expected to result in significant synergies with an anticipated annual run -rate of CHF 100 million, realized over three years from closing. Implementation costs are estimated at CHF 80 million over the same time. The combination will be significantly EPS accretive in the first year.

Clariant will have the majority stake in the intended business combination. Depending on the definitive valuation which is to be determined by both parties in the coming months, an equalization consideration will be made by Clariant to SABIC.

In addition, Clariant announced that by 2020 it intends to divest the Pigments, standard Masterbatches and Medical Specialties businesses which will not be included in the newly formed Business Area High Performance Materials. This divestment decision underlines Clariant's commitment to move the portfolio into higher specialty areas and to ensure best ownership for each of its businesses. Despite being well positioned and having significantly increased their profitability over the past years, the businesses to be divested do not match the Group's criteria to differentiate through innovation in higher growth and higher profitability areas.

By 2021, following the creation of High Performance Materials and the divestment of the remaining Plastics & Coatings Business Area, Clariant expects to deliver significantly higher sales of around CHF 9 billion and an EBITDA margin of approximately 20 % with an operating cash flow of more than CHF 1.2 billion.