Big Guns Chase Süd-Chemie Majority Stake

Other Investors Under Pressure to Sell

21.01.2011 -

One Equity Partners (OEP) has lined up at least four bidders for its majority stake in Germany's Süd-Chemie, putting other investors under pressure to sell, people briefed on the matter told Reuters.

U.S. conglomerate Honeywell, Belgian catalysts and battery-materials maker Umicore, the Japanese maker of Verbatim data disks Mitsubishi Chemical and Swiss chemicals group Clariant are among the prospective buyers, three sources close to the suitors said late on Wednesday.

A spokesman for OEP, which holds 50.41% of Süd-Chemie, reiterated that the private-equity firm was looking into strategic options for Süd-Chemie, including a stake sale.

Süd-Chemie, a maker of catalysts and absorbants, declined to comment, while a Mitsubishi Chemical spokesman said he had not heard of the matter and the other possible bidders declined to comment.

A potential conflict could be brewing over Süd-Chemie because the bidders would prefer to take over the entire company and fold it into their operations to cut costs, while some long-term minority shareholders are reluctant to part with their stakes, the sources told Reuters.

Key shareholders are chemical-industry heir and entrepreneur Dolf Stockhausen with 10.2%, the Winterstein family with 10.1%, and Axel Schweighard, a descendant of one of the group's founders, with 3.39%.

None could be reached for immediate comment.

With €1.2 billion ($1.6 billion) in expected 2010 sales, up 10% year-on-year, Süd-Chemie has a market value of about 1.5 billion euros. However, it has a free float of less than 26%.

The shares, which change hands only sporadically, trade at 13.1 times annual core earnings, including net debt, about 20% above the average of its five closest peers, according to Thomson Reuters StarMine.

Süd-Chemie, founded in 1857, is mainly coveted for its catalysts business, which caters to the sprawling petrochemical industry in the Middle East, including SABIC.

The division, which competes with Denmark's unlisted Haldor Topsoe, makes compounds that speed up or enable chemical reactions and its catalysts also help turn plant material into biofuel.

Süd-Chemie's second division, which makes absorbents for detergents and paper and which are also used to refine olive oil, is regarded as less attractive.

OEP, headed by U.S. investment banker Dick Cashin, bought a stake in Süd-Chemie in 2005 for 35 euros per share and in 2007 obtained a majority holding.



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