July 24, 2019 / 6:03 AM / 5 months ago

UPDATE 2-Clariant CEO exits abruptly, renewing turmoil at Swiss group

* Occhiello quits after less than a year as CEO

* Ex-CEO Kottmann to serve as interim boss

* Due to report earnings on July 25 (Adds detail, analyst)

By John Miller

ZURICH, July 24 (Reuters) - Ernesto Occhiello had three tasks when he became Clariant's boss last September: restore calm after an activist investor uprising, oversee a tie-up with Saudi Basic Industries and keep the peace with Chairman Hariolf Kottmann.

Just 10 months later, Occhiello has quit as chief executive "for personal reasons with immediate effect", the specialty chemicals maker said on Wednesday, raising speculation the Italian failed on at least one of those fronts.

The guessing game as to which one has started, said Baader Helvea analyst Markus Mayer, with the news sparking a nearly 4% decline in the stock as Clariant shareholders grapple with a fresh round of turmoil.

"We regret the resignation of Ernesto Occhiello as he had a good reputation in the chemical industry and started several important transformation steps at Clariant," Mayer wrote in a note to investors.

"No matter what the reason(s) for Ernesto Occhiello's resignation is, it creates insecurity."

Occhiello was not available through the company for immediate comment.

Mayer raised several possibilities for the upheaval, starting with a falling out between Occhiello and Kottmann, Clariant's ex-CEO who took over as chairman last year.

Alternatively, he said, Aramco-controlled Saudi Basic Industries (SABIC), which holds 25% of Clariant, may have altered its strategy over how to combine Clariant's additives and specialty masterbatches businesses with parts of SABIC's specialty chemicals operation into a new High Performance Materials joint venture.

The JV, to be Clariant-controlled, would involve a still-undisclosed one-off payment to SABIC likely to top $1 billion.

Finally, SABIC may have changed its mind about sticking to its minority holding and could be eyeing a full Clariant takeover, Mayer said, in which case Occhiello as a former SABIC employee would have had to leave.

"Occhiello would have been conflicted," Mayer said.

TURMOIL REVISITED

Occhiello, a former chemistry professor who managed SABIC's specialty chemicals business, arrived at Clariant after the company had been buffeted by turmoil.

A 2017 dispute between the Swiss company and a U.S.-based activist investor, White Tale, spoiled Kottmann's plan to merge with U.S.-based Huntsman Corp.

That drawn-out conflict only ended when SABIC bought its stake in January 2018.

The Muttenz-based company on Wednesday declined to provide details about Occhiello's resignation, an abrupt move that comes without a successor in place.

For now, Kottmann, who built Clariant during his decade-long stint as CEO through a series of acquisitions and divestitures and who clashed with White Tale during the activist row, will re-assume leadership duties until a successor is found, Clariant said.

A Clariant spokesman said a search for Occhiello's replacement would likely be both internal and external. With Occhiello's resignation to the board only on Tuesday, the search has yet to begin.

"Clariant will continue to implement its strategy," Kottmann said in a statement, adding he would provide details on the talks with SABIC over the joint venture on Thursday when the Swiss company releases first-half 2019 results.

Kottmann was in meetings and unavailable for immediate comment, the company said. (Reporting by John Miller, editing by Riham Alkousaa and Jason Neely)

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