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Clariant hit by Hoechst plan
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June 1, 1999: 11:20 a.m. ET
Stock of Swiss specialty chemical maker falls 2.5% as Hoechst mulls sale
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LONDON (CNNfn) - Swiss specialty chemicals maker Clariant saw its shares fall almost 2.5 percent in Zurich after German pharmaceutical giant Hoechst said Tuesday it may sell its entire 45 percent stake in the company.
Investors reacted with dismay at the news, fearing that the planned placement this summer will leave a stock overhang.
Hoechst said it plans to retain a "significant residual stake" in Clariant, but in a briefing with analysts, the company's Chief Financial Officer Klaus-Jürgen Schmieder admitted that the whole stake could be put on the market.
"Everything depends on market conditions. I could not rule out that under very favorable conditions we would sell the entire stake," Reuters quoted Schmieder as saying.
Analysts argue that with Hoechst clearly intent on disposing of its entire stake at some point, a failure to place the whole stake at the first attempt could permanently hurt Clariant's stock.
"If the shares cannot be placed, Clariant will suffer because everyone will know that the stake will be sold at some point," one analyst, who asked not to be named, told Reuters.
Clariant tried to put a more positive spin on the planned sale, claiming the disposal would allow it to attract a bigger spread of shareholders. "We understand Hoechst AG's desire to reduce its shareholding and view this as an opportunity to expand our investor base and to improve the liquidity of our shares," said Roland Lösser, chief financial officer of Clariant.
Clariant said it will seek to list the shares in Frankfurt. "It is currently envisaged that the transaction will be completed before the summer," the two companies said.
Hoechst is planning the secondary offering of its stake as part of its upcoming merger with Rhône-Poulenc of France to create Aventis, the world's second-largest life sciences company.
As part of the merger process, Hoechst set itself a timetable of disposing of all of its industrial chemical holdings by the end of 2000. Hoechst currently owns 6.5 million Clariant shares, which at the current market price is worth some 4.4 billion Swiss francs ($2.9 billion). 
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