UPDATE 2-Activist White Tale demands Clariant board seats, review

* Threatens to call extraordinary shareholders meeting

* Clariant says open for talks, has duty to all shareholders

* Shares down nearly 2 pct in early trading (Adds Clariant response, analyst, share price)

ZURICH, Oct 30 (Reuters) - White Tale Holdings, the activist investor that thwarted a $20 billion merger between Clariant and U.S. rival Huntsman, on Monday demanded three seats on the Swiss chemical maker's board and an independent strategic review of the business.

The companies dropped their merger 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.

"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."

"Unfortunately, Clariant management's comments since Friday betray a desire to go back in time and pretend this episode did not occur. It is not October 2016," it said.

It demanded an independent financial adviser review strategic alternatives for Clariant.

White Tale, which has said Clariant should sell its plastics and coatings business and reinvest the proceeds in higher-margin areas, said it would keep an open mind about the review's findings.

Clariant said it had held several talks with White Tale since Friday.

"We will continue this exchange as part of our ongoing dialogue with all our shareholders. During this process we will of course consider White Tale's requests. Clariant will nonetheless keep the interest of all stakeholders in mind when talking to White Tale," it said.

It expressed confidence that "reasonable discussions" would focus on the sustainable future of Clariant.

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 were down nearly 2 percent in early trading.

"We expect an independent review of Clariant to highlight once more that the Huntsman merger did not make strategic sense," analysts at Bernstein said in a research note.

They noted Clariant's board of directors now consists of nine people, including Chief Executive Hariolf Kottmann.

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

(Editing by Jason Neely)