While Clariant, as part of a global restructuring effort, decided to acquire Hoechst's specialty chemicals business (represented by Colour-Chem in India), the Securities & Exchange Board of India (Sebi) ruled that Clariant International would have to make an open offer for acquiring 51.1 per cent of Colour-Chem's equity in India. Even as analysts expect Clariant to expedite work on the Colour-Chem front, the latest announcement could call for a reworking of numbers.

The proposed Clariant-Colour-Chem merger itself, analystssay, may call for some restructuring given the existence of a non-compete clause in an earlier Colour-Chem-Dystar India deal for assigning the former's textile dyes business. DyStar India is a 100 per cent subsidiary of the global joint venture of German multinationals Hoechst and Bayer.

Under the DyStar deal, Colour-Chem has entered into a toll-manufacturing agreement, and received a specific compensation for the transfer of its textile dyes business to the former. This has been perceived as a hurdle to the Colour-Chem merger with Clariant, given that textile dyes account for a significant part of Clariant's Indian business, and non-competition could see an erosion in sales. To further complicate matters, Ciba Specialty India now comes with its own textile dyes joint venture with Mafatlal group company, Indian Dyestuff Industries (IDI). The new joint venture outfit, Indo Swiss Textile Chemicals Ltd, registered sales of Rs 32 crore in the first year of operations. The Ciba-IDI deal is also apparentlycovered by a similar non-compete clause.

Besides, Ciba had, in August this year, announced its intent to explore strategic options (including a possible divestment) for its performance polymers division. The Swiss major is preparing a profit-recovery programme for this business. This again could prove to be a spoke in the wheel of a smooth merger in the Indian context. Analysts say that not only is Ciba Specialty Chemicals India's performance polymers business a significant contributor to turnover (Rs 80.2 crore in 1997-98), but add that it is unclear whether the Colour-Chem portfolio also includes similar products. The new Clariant may thus have much more than a mere merger on hands.