Clariant says PolyOne unit sale still on, mulls payout changes

ZURICH (Reuters) - Swiss speciality chemicals maker Clariant CLN.S aims to finalise the $1.6 billion sale of its masterbatches unit to PolyOne Corp POL.N by September, Chairman Hariolf Kottmann said on Thursday, dismissing concerns the coronavirus outbreak could derail the deal.

FILE PHOTO: A woman stands next to a logo of Swiss specialty chemicals company Clariant ahead of a news conference to present the company's full-year results, in Zurich, Switzerland, February 14, 2018. REUTERS/Moritz Hager

A 1 billion Swiss franc ($1.03 billion) shareholder payout hinges on disposal of the unit that makes colours, additives and concentrates for plastics. U.S.-based PolyOne indicated last week it remains committed to the transaction.

While Kottmann is sticking by the planned extraordinary dividend of 3 francs per share and said Clariant does not need the cash for liquidity as the coronavirus’s impact intensifies in the second quarter, he did not rule out potential payout changes.

“It could be - we speak now theoretically - that we decide to pay out 2 Swiss francs, and decide about 1 Swiss franc in the AGM in 2021,” Kottmann, who last year assumed an executive chairman role after the former CEO quit, told reporters on a call.

“But there is no doubt, in principle, that we share this gain with our shareholders.”

Kottmann, whose company on Thursday reported falling first-quarter profitability and sales, said Clariant’s board meets in May to discuss the June 29 shareholder meeting that includes the dividend proposal vote.

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Clariant is slimming down after failed efforts to combine with U.S.-based Huntsman Corp and Saudi Basic Industries 2010.SE, its biggest shareholder with a 31.5% stake.

So far, Kottmann said, PolyOne has not pressed Clariant to cut the deal’s price.

PolyOne reiterated a week ago its commitment, when Chairman Robert Patterson told investors “I don’t believe the current market conditions change our perspective”. Backing out would cost PolyOne $75 million.

Kottmann did say the sale of its pigments unit, which sources have said may fetch 900 million Swiss francs ($927.7 million), has been delayed as the pandemic hinders talks with strategic and private equity investors.

“We are not in a rush,” he said, conceding closure could be pushed into 2021.

First-quarter sales for Clariant’s continuing operations fell 12% to 1.019 billion Swiss francs ($1.05 billion), the company said. Operating profit as a share of sales fell to 15.4% from 15.7%.

Even before the coronavirus gripped the world, Clariant was bracing for headwinds, with some 600 job cuts planned to reduce costs amid portfolio changes.

Kottmann said the job cuts were on hold, for now, amid the pandemic that he acknowledged took him off guard when it went from “an Asian problem” to a global calamity.

“We do not want to fire people now,” he said, adding reductions could resume come September.

Reporting by John Miller; Editing by Michael Shields and Alex Richardson