Evonik's Carbon Black Unit Has About 5 Suitors
The Company Hopes to Close Deal by End of Q2
A handful of strategic and financial bidders have expressed interest in the Carbon Black unit of Germany's unlisted chemical maker Evonik Industries, several people close to the matter told Reuters.
Bids are due toward the end of February, and Evonik hopes to close the deal in the second quarter, the sources said.
"It will be a race between Asian players and private equity," an industry source said, adding that the business has vastly shifted to Asia in recent years.
Interested strategic players include India's RPG Group, while two U.S.-based private equity investors - one of them Advent - have also expressed their interest, another insider said.
German synthetic rubber specialist Lanxess, which some experts have expected to bid, is not interested, two sources said.
Evonik, Advent and Lanxess declined to comment. Officials at RPG could not be reached for immediate comment.
Evonik hopes to fetch "a little more than one times annual sales" — about €1 billion — a person close to the sales process said, though two other sources said this may prove ambitious.
Rival Aditya Birla Group of India on Monday announced the takeover of U.S.-based Columbian Chemicals for $875 million, challenging Cabot Corp for the No.1 spot in the $9 billion carbon black industry and relegating Evonik to third place.
The deal, which will double Birla's capacity, prompted the buyer to say it was no longer interested in Evonik's unit.
Evonik, which said last year that it has hired an investment bank to manage the sale of the unit, plans to use the proceeds to expand its core specialty chemicals business.
Industry experts have described Evonik as having cutting edge carbon technology but said that low-cost emerging market players including China Synthetic Rubber were catching up fast.
Carbon black production is highly energy intensive, putting European producers at a disadvantage over rivals with cheaper access to fossil fuels.
Carbon blacks were originally derived from soot, and more than 60% of world production is used to make tires more durable.
They are also used for laser printer and photocopier toners.
Market researcher Freedonia expects the global carbon black market to rise 4.3% per year until 2013 to 11.6 million tons, driven mainly by tire demand in Asia.
Evonik is majority owned by a government-controlled trust that bears the long-term liabilities of Germany's wound-down coal mining industry.
Private equity firm CVC Capital Partners bought a 25% stake in Evonik in 2008 after a share sale and a listing on the Frankfurt stock exchange failed several times.