* White Tale has 15.1 pct Clariant stake, No.1 shareholder
* Activist investor opposes merger with Huntsman
* Investor says open to joining board of directors
* Clariant reaffirms merger intent (Updates with comment from Huntsman)
ZURICH, Sept 19 (Reuters) - The activist investor fighting Clariant's planned $20 billion merger with Huntsman Corp has built a 15.1 percent stake that makes it the biggest shareholder in the Swiss chemicals maker.
In a letter to Clariant's board of directors, White Tale Holdings, a vehicle created by investor Keith Meister's Corvex hedge fund and New York's 40 North, underscored its opposition to the Huntsman deal.
"Unfortunately, we remain convinced, and increasingly so, that the proposed merger is detrimental to Clariant shareholders," it said in the letter published on Tuesday.
"It both significantly destroys existing Clariant shareholder value and prevents Clariant from pursuing multiple alternative and immediate opportunities to unlock value for its shareholders."
Clariant responded by reaffirming that its board is determined to go ahead with the deal.
"The planned merger is the best value-creating option for all stakeholders," Clariant said in a statement late on Tuesday.
The company said the deal would create $3.5 billion of value, largely through cost and tax savings, adding that a further merger update would be released in the coming weeks.
Early on Wednesday, Huntsman said White Tale was seeking to scuttle the deal in hopes of making a quick profit.
"White Tale has advanced a destructive, high-risk strategy of dismantling Clariant and denying all other stakeholders of the company the sustainable, long-term benefits of this compelling combination," Huntsman Chief Executive Peter Huntsman, who is due to become the combined company's CEO, said in a statement.
White Tale, which said it was open to joining Clariant's board, said alternatives included a sale of the Swiss company's plastics and coatings unit, which accounts for 43 percent of Clariant's 5.8 billion Swiss francs ($6 billion) of annual revenue.
Clariant, however, said that a sale of that business at this stage would be "value destructive in view of its significant cash contribution and cost coverage".
Clariant is the latest company to have its plans challenged by an activist investor, with global companies including Nestle and BHP Billiton both facing criticism.
Clariant shares fell 0.5 percent on Tuesday. Huntsman shares were down 1.5 percent at 1925 GMT.
In July Clariant said that White Tale Holdings held "in excess of 10 percent" of its shares.
'MERGER OF EQUALS'
Clariant and Huntsman in May announced a merger valued at about $20 billion including debt in which Clariant shareholders would hold 52 percent of the combination.
They talked up prospects for faster growth for the combined company as rationale for "a merger of equals". Among other things, they expect about $400 million in annual cost benefits.
However, White Tale, which made public its opposition in July, said around 300 million Swiss francs of these savings could be achieved by Clariant alone.
"The terms of the proposed merger significantly undervalue Clariant's shares while they simultaneously overvalue Huntsman at the peak of its cyclical commodity business cycle," White Tale said.
Kepler Cheuvreux analyst Christian Faitz rejected White Tale's criticism.
"White Tales suggestions are naïve, in our view," he said. "Real life in the chemical industry is not planned on a consultant or banker flip chart."
In a newspaper interview published this month, Huntsman Chief Executive Peter Huntsman said shareholders in Clariant and his own company "almost without exception" supported the deal after learning the rationale.
Two thirds of Clariant shareholders must back the merger at a special meeting for it to proceed. The date has yet to be set, with Clariant CEO Hariolf Kottmann saying he would only schedule it after regulators approve the deal.
At the Swiss company's last annual shareholder meeting in March, however, investors representing only 53 percent of the share capital voted.
At that participation level White Tale would have just shy of 30 percent of the votes and would need only a limited number of allies to halt the deal.
However, it is likely turnout at the next meeting will be higher. To that end, Kottmann has been meeting investors, including at the Dorchester Hotel in London this month, to convince them of the transaction's merits.
A person close to the matter said Clariant's second-largest investor, a group of Bavarian families who hold about 14 percent of the shares, remained "fully supportive" of the merger. ($1 = 0.9604 Swiss francs) (Additional reporting by Arno Schuetze in Frankfurt and Silke Koltrowitz in Zurich; Editing by Michael Shields, Mark Potter and David Goodman)