Clariant, the Swiss speciality chemicals maker and its US rival Huntsman have agreed to a cross-border "merger of equals" that will value the combined entity at $20bn (£15.4bn).
The all-shares transaction will give the Swiss company a controlling share of 52% of the merged company, which will become known as HuntsmanClariant.
Based on pro forma figures from 2016, the combined group would generate annual sales of approximately $13.2bn, adjusted pre-tax earnings of about $2.3bn and a combined enterprise value of close to $20bn the two companies announced on their websites.
CEOs herald deal
"This is the perfect deal at the right time," said Hariolf Kottmann, chief executive of Clariant who will become the merged company's chairman.
He added: "Clariant and Huntsman are joining forces to gain much broader global reach, create more sustained innovation power and achieve new growth opportunities.”
Peter Huntsman, the chief executive of the US company who will remain as CEO of the combined group, said the deal would create a global leader in speciality chemicals with a combined balance sheet providing "substantial financial strength and flexibility".
The deal marked the latest in a string of high profile mergers within the chemicals and agri-business industries.
- Germany's Bayer, the world's biggest chemicals group by market capitalisation, is currently trying to win regulatory approval for its $66bn acquisition of US seed business Monsanto
- Last month, China National Chemical Corp won US antitrust approval to buy Switzerland's Syngenta for $43bn
- In March, the European Union approved the merger of Dow Chemical and Du Pont a $62bn all-American deal
- Another all-US merger between agri-chem companies Potash Corp and Agrium will create a combined entity worth $30bn
Low agricultural commodity prices have eaten away at prices of fertilizers and nutrients, forcing chemicals companies to seek ways to cut costs and find greater global reach and scale.
Huntsman has been seen as a potential takeover candidate for many months, and since the start of the year the shares have risen nearly 58%. On Friday the shares rose 3.4% and were expected to gain at the open.
Shares in Clariant jumped 9.4% to SFr22.83 on Monday following the announcement.