Clariant to Merge Pigments with Heubach Group

15.06.2021 - In a somewhat unusually structured deal, Swiss specialty chemicals producer Clariant has reached a definitive agreement with a consortium of Heubach Group and private equity investor SK Capital Partners to unload most of its pigments business. Following completion of the transaction, expected in the first half of 2022, Clariant will reinvest in the business, taking a 20% share. The shares of the other partners have not been revealed.

The agreement values Clariant Pigments at 805-855 million Swiss francs million on a cash and debt free basis, contingent on an earn-out payment of 50 million Swiss francs tied to the 2021 financial performance of the existing business. This represents a 10.7x to 11.4x stand-alone adjusted EBITDA multiple per April 2021 (LTM).

Closing, expected in the first half of 2022, is subject to customary conditions and regulatory approvals. The share of the Clariant pigments business in Infraserv Höchst, which operates the chemical park at Frankfurt, Germany, is not part of the deal.

Under the terms of the deal, Heubach’s pigments portfolio will be merged with Clariant’s slate, creating a new global player with around 3,000 employees, more than €900 million in annual sales and service and production capabilities at several global locations. By reinvesting, Clariant said it will be able to continue benefiting from the improving profitability generated by its ongoing efficiency program as well as participate in future growth opportunities offered by synergies of the combined operation.

Conrad Keijzer, CEO of Clariant, said the sale agreement represents a final step in the company’s divestment program and portfolio repositioning announced in July 2018. As a high value specialty chemicals company with above-market growth, higher profitability and stronger cash generation, he said it will be able to fully focus on growing revenue and profitability of its core business areas of Care Chemicals, Catalysis and Natural Resources.

After the unanticipated collapse of its plans to collaborate closely with Saudi chemicals producer Sabic, Clariant had hoped to sell the pigments activities by 2020. However, it pulled the plug temporarily in early 2020, due to the coronavirus pandemic and related concerns about the knock-on effect on the sale price.

Johann Heubach, CEO of the family-owned pigments producer, called the decision to merge with the Clariant business a “major milestone” in the family’s drive to promote consolidation in the pigments industry. In terms of industry-leading technologies, a product portfolio serving a wide range of customer requirements and global production and service footprint, the fit is “perfect,” he said.

The Clariant pigments business is a global provider of high-end organic pigments, pigment preparations and dyes used by the automotive industry as well as in industrial and architectural coatings and in the plastics industry. In 2020, the unit with 1,900 employees generated some 850 million Swiss francs in sales on a stand-alone adjusted basis.

Heubach, with more than 200 years of experience in pigments production, is also globally oriented as a producer of organic, inorganic and anticorrosive pigments and pigment preparations headquartered in Langelsheim, Germany. In addition to Germany, the company has production sites in the US and India, along with sales offices around the world. 

Author: Dede Williams, Freelance Journalist