* Clariant CEO vows to remain despite defeat
* White Tale boosted stake to more than 20 pct
* Clariant shares down more than 6 percent (Adds detail about Evonik interest, comment from analyst, details throughout)
ZURICH, Oct 27 (Reuters) - Swiss specialty chemicals maker Clariant and U.S. group Huntsman abandoned their $20 billion merger on Friday, notching a win for activist investors who fought the deal for months on the grounds it would destroy shareholder value.
White Tale, the investment vehicle of hedge fund manager Keith Meister and New York-based fund 40 North, had raised its Clariant stake to above 20 percent, Reuters reported on Thursday ahead of the announcement the tie-up was dead.
White Tale's rising stake, coupled with other Clariant shareholders who came out against the deal, left the Swiss company doubtful of mustering the two-thirds support necessary for the merger to go through.
The successful revolt comes amid a wave of investor activism in Switzerland, where Credit Suisse is under attack and Nestle faces demands for change.
Chief Executive Hariolf Kottmann said Clariant still has options to explore after further talks with White Tale.
"To do a merger of equals ... is one option, to make a large transformational transaction is another option, to continue to stand alone is a third option," Kottmann told reporters on a call where he vowed to remain CEO.
"There are four or five of these options, and they have all pros and cons."
Clariant shares had risen about 38 percent this year before Friday's announcement but were still more cheaply rated than rivals, trading at a multiple of 18.7 times forecast earnings against an average 21.3 ratio of peers in the chemicals industry, according to Starmine data.
The stock was down 6.3 percent by 0840 GMT on Friday.
Scepticism that the deal would succeed had been mounting as even supporters sold down their stakes. "I thought it was a fantastic deal," said one investor who built up a stake before selling it on fear White Tale was gaining the upper hand. "I think White Tale want something more short term."
Some analysts say Clariant will likely re-emerge as prey for other chemicals companies eager to beef up their portfolios.
"Clariant is again the No. 1 takeover target," said Markus Mayer, a Baader Helvea analyst who said potential buyers may wait to make an approach until Clariant's share price falls even further, or until White Tale is able to install management that is more favorable to a takeover.
A source familiar with the acquisition strategy of Germany's Evonik said it would potentially be interested in acquiring portions of Clariant should the Swiss company be broken up. Evonik declined comment.
Two years ago, Evonik held talks with buyout group CVC over a potential joint offer for Clariant, although Kottmann has said he never received a formal bid.
"There were never serious discussions with another peer, where we were asked if we would divest ourselves, shop the company and be taken over," Kottmann said.
Huntsman CEO Peter Huntsman said separately he was disappointed the transaction did not go through.
Clariant and Huntsman, which said its third-quarter costs linked to the merger were $18 million, agreed to forego breakup fees. Clariant had faced a potential $210 million hit from walking away from the deal, and a $60 million fee if Clariant shareholders failed to approved the transaction.
Clariant, which had hired Goldman Sachs to rescue the merger, makes aircraft de-icer, retardant for wildfires, plastics colorings, chemicals to help oil drillers separate oil from water and ingredients for shampoos.
Clariant and Huntsman in May struck the pact that would have given Clariant 52 percent of the combined entity, saying the combination would produce around $400 million in annual cost synergies and create the world's second-biggest specialty chemicals maker behind Evonik.
In fighting the Huntsman tie-up, Meister and 40 North's David Winter and David Millstone contended the merger would not deliver enough benefits, while exposing Clariant to Huntsman's debt and volatile commodity chemicals business.
White Tale did not immediately make a statement, although Kottmann said Clariant would sit down again with Meister, Millstone and Winter. White Tale previously said it would accept a seat on Clariant's board as biggest shareholder.
"I have not seen any kind of alternative proposal from our activist, but I think this is something we will discuss with these guys in the future," Kottmann said.
Konstantin Winterstein, a Clariant board member and representative of a group of Bavarian families that owns 14 percent of Clariant, had supported the deal and is sticking by Kottmann.
"Clariant's development under the long engagement of Hariolf Kottmann and his team has been outstanding and remains well positioned to continue its successful course even without the merger," Winterstein said. (Additional reporting by Maiya Keidan in London, Matthias Inverardi in Duesseldorf and Ludwig Burger in Frankfurt; Editing by Michael Shields and David Holmes)