Clariant vulnerable to take-over as share price remains very low

Clariant's share price has lost more than 40% of its value in 2007 after a stuttering restructuring and an inability to generate profit (margins) in the current competitive climate (higher raw material costs and inability to raise selling prices) and the growing competition from India and China (lower cost base). The low share price leaves the company vulnerable to predatory moves and there is growing speculation and questions regarding their future.

'Clariant now trades at about 8 times forecast 2008 earnings, a discount of some 50 percent to the sector due to its poor profitability and poor outlook, according to Reuters data, but it is hard to see where a potential buyer might find value (according to analysts)'

Clariant repeated this week it may sell some of its underperforming units, 'including detergents, textile effects, printing inks and paper', but prices would likely be at a lower multiple than the company as a whole.

The company still maintains it wants to stay independent! It is going to be a tough year for Clariant and Jan Secher. The paper business remains very vulnerable as its key businesses are in optical brightening agents and dyes where Asia has made strong inroads in the last few years providing similar products and supply quality at a very competitive price. It has also not engendered confidence in its paper strategy after various diverse ventures at broadening its portfolio have stuttered. The recent naïve bid to compete in the paper emulsion polymer market now seems to have been abandoned.