Clariant pigments sale set for September revival after COVID-19 pause – sources

16 July 2020 - 08:10 am UTC

by Ryan Gould in London

The sale of Clariant’s Pigments unit is set to be revived in September after COVID-19 forced management to postpone initial buyer meetings in April, according to three sources familiar with the matter.

 

The Swiss specialty chemicals maker sent out information memoranda for the unit, which makes dyes for the car and construction industries, to potential suitors in March before the outbreak took hold, the sources said. The unit was reportedly worth up to CHF 900m (EUR 834m) at the time.

 

Appointed advisers at Deutsche Bank, who were seeking offers of around 8x EBITDA for Pigments prior to the crisis, might now reasonably expect to field bids in the region of 7x EBITDA to accommodate for any pandemic-induced earnings impact, said two of the sources. Pigments has EBITDA of around CHF 140m (EUR 129.6m), this news service previously reported.

 

Buyout groups including Advent InternationalSK CapitalTriton and Rhone – previously tipped to be interested in the asset – could look to form bidding consortia as they reconsider their appetite, the sources added.

 

A driven strategic party could also explore teaming up with a private equity sponsor to make a bid in an attempt to counter a lack of visibility from the pandemic on future performance, one of them said.

 

Funds including Ardian and IK Capital could similarly see logic in teaming up with a larger sponsor with a track-record of working with businesses in the chemicals sector like Permira, the same source suggested.

 

A revival of the pigments sale follows Clariant’s divestment of its plastic colourants and additives division Masterbatches to PolyOne for USD 1.56bn (EUR 1.36bn), or 12.2x TTM EBITDA, in December 2019.

 

A further source familiar with Clariant said the company’s divestiture programme, which includes the sale of Masterbatches and Pigments, remains on track for completion by the end of 2020.

 

One of the sources said that discussions around a long-rumoured merger of Clariant with a specialty chemicals peer are likely to be catalysed as the revived sale of Pigments accelerates.

 

Another of the sources said that while the Pigments divestment is not a “poison pill”, it has the potential of drawing attention to Clariant’s smaller size and its cash-rich balance sheet.

 

A spokesperson for Clariant declined to comment.