January 22, 2020 / 2:30 PM / 2 months ago

Clariant's pigments auction due to get under way -sources

FRANKFURT/ZURICH, Jan 22 (Reuters) - Clariant is reviving the sale of its pigments unit, people familiar with the matter told Reuters, which may fetch up to 900 million Swiss francs ($927.7 million) as the Swiss chemicals maker slims down after failing to combine with peers.

Deutsche Bank, mandated by Clariant to find a buyer, will launch the auction next month, one of the sources said. Information memorandums are going to private equity groups such as Cinven, Bain, Triton, Ardian and SK Capital in the first quarter, several people said.

Clariant's pigments business, which makes dyes including for the car and building industries, may be valued at 800-900 million francs, or around 8 times core earnings.

The auction was initially slated for a year ago, but Clariant put it on a back burner after rival BASF put a similar business on the block, then sold it to Japanese printing ink maker DIC Corp.

While BASF's unit was sold at a valuation of 9-10 times core earnings, Clariant's more-commoditised business may fetch less amid a tough economic climate, one of the sources said.

Analysts from Vontobel this month suggested Clariant's pigments unit could fetch 900 million francs, bringing the total haul from disposals to at least 2.8 billion francs.

Slimming down could have its price in independence, they added. "Clariant is a very attractive takeover target after the disposals in 2020," Vontobel said.

Clariant declined to comment on the auction's time frame or valuation.

The Muttenz, Switzerland-based company is also seeking a new CEO after the last one bolted in August following a difference of opinion with Chairman Hariolf Kottmann, who is now running Clariant on an interim basis.

Clariant's failed merger with Huntsman, in the face of activist investor resistance, and the joint venture it abandoned in August with Saudi Basic Industries (SABIC) have led to asset sales beyond what the Swiss company originally envisioned.

Clariant is concentrating on its faster-growing segments including catalysts, ingredients for shampoos, and chemicals for the oil and gas industries, while unloading commoditised operations.

SPECIAL DISTRIBUTION

In December, Clariant sold its masterbatches business for $1.6 billion to PolyOne. October's disposal of its healthcare packaging business brought $300 million.

Some of the proceeds are going for a special $1 billion distribution this year to shareholders. SABIC, Clariant's largest shareholder, stands to get about $250 million.

Clariant shares are up 31% since August when they hit a three-year low.

After disposals, Clariant will have 4.4 billion francs annual revenue, from 2018 sales of 6.6 billion. ($1 = 0.9701 Swiss francs) (Editing by Michael Shields)

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