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The growing coronavirus (Covid-19) crisis and a possible recession could jeopardize PolyOne's $1.
6 billion acquisition of Clariant's masterbatch business
.
On a recent conference call, PolyOne CEO Robert Patterson said the deal included a "material adverse event clause" (MAC) and that "we will look after investors' funds first
.
He said PolyOne would not trade "under any circumstances" given the "enormous uncertainty surrounding almost everything" due to the crisis
.
The deal includes a termination fee of $75 million
.
Analyst calls asked about the viability of the acquisition, as PolyOne's valuation has fallen since PolyOne and Clariant struck a deal in December
.
Patterson added that there is no need for PolyOne to act at this time, "act now, but we have to
.
The earliest closing date for the deal is June 2, and the deal could also be delayed due to delays in obtaining regulatory approvals
.
In Europe in particular, the authorities' office operations have been affected by public health restrictions imposed to contain the spread of the coronavirus, Patterson said
.
In addition, he said it was unclear how long or how severe the global recession would be, adding: "It does matter because the shorter the time, the better for us
.
"
Between today and the eventual deal, PolyOne will learn more about the virus and its impact on the economy, he said
.
He went on to point out that in China, where the crisis began, the number of people infected with the coronavirus is reported to be falling, and the country has begun to resume work
.
A return to normalcy is certain, but the timing is uncertain, he said
.
PolyOne will stay the course and keep options open, including working to close the deal with Clariant
.
He said the acquisition "makes sense" because it would strengthen PolyOne's position in the global specialty space
.
But Patterson reiterated: "That doesn't mean we're going to ignore what's going on and keep trading in any or all cases - we're not going to do that
.
"
