ZURICH (Reuters) - The fight over chemicals company Clariant's CLN.S future turned bitter on Monday as activists who thwarted a $20 billion merger with Huntsman HUN.N threatened to call a shareholder meeting if they do not get three board seats and a strategy review.

The logo of Swiss specialty chemicals company Clariant is seen at the company's headquarters in Pratteln, Switzerland October 29, 2017. REUTERS/Arnd Wiegmann

Clariant and Huntsman HUN.N dropped tie-up plans on Friday after White Tale, an investment vehicle backed by hedge fund manager Keith Meister and New York-based fund 40 North, raised its Clariant stake to more than 20 percent.

Meister and 40 North’s David Winter and David Millstone took Clariant executives including Chief Executive Hariolf Kottmann to task, accusing them of ignoring their demands.

“Unfortunately, Clariant management’s comments since Friday betray a desire to go back in time and pretend this episode did not occur,” White Tale said.

“Should we be unable to come to agreement with the current board of directors shortly, we will have no choice but to move to call an extraordinary general meeting so that all shareholders can have a voice in Clariant’s future.”

Clariant shares slipped 2 percent by 1540 GMT.

BOARD MEETING

White Tale has argued the merger plan undervalued Clariant, which should instead sell its plastics and coatings business and reinvest the proceeds in higher-margin areas, but on Monday pledged to keep an open mind about the findings of any review.

Clariant said it would take up White Tale’s demands at its next board meeting.

“Management has offered to White Tale its readiness to present its existing growth strategy, listen to White Tale’s plans and discuss appropriate concrete ways forward, including White Tale’s wish for seats on the board of directors,” Clariant said in a statement.

Clariant will continue dialogue with its other shareholders, it added, including Bavarian families whose nearly 13 percent combined stake make them the company’s second-biggest investor.

In particular, White Tale took issue with Kottmann’s insistence that the merger’s collapse put Clariant back in the same position it found itself in October 2016, before discussions over a tie-up with Huntsman.

White Tale, whose stake is worth some $1.68 billion, countered on Monday that “it is not October 2016.”

JUST BEGINNING

“While the termination of the ill-conceived Huntsman merger is a positive first step in executing on this strategy, by no means is this a cause for celebration,” White Tale said. “The work is just beginning.”

This new, more strident tone shows White Tale is “upping the ante” to get Kottmann to consider alternatives, Bernstein analysts said.

They noted Clariant’s board of directors now consists of nine people, including Kottmann.

“Three board seats would give White Tale a representation similar to their shareholding,” the Bernstein analysts said.

“However, we note that they would require 50 percent of share capital to remove management, which could be difficult, even though their support is increasing among the shareholder base.”