Specialty chemicals producer Rockwood Holdings Inc’s pigments businesses have attracted offers from buyout firms including Blackstone Group LP and Advent International Corp, several sources told peHUB.
NEW YORK (Reuters) – Specialty chemicals producer Rockwood Holdings Inc’s (ROC.N: Quote, Profile, Research, Stock Buzz) pigments businesses have attracted offers from buyout firms including Blackstone Group LP (BX.N: Quote, Profile, Research, Stock Buzz) and Advent International Corp, several people familiar with the matter said.
The auction for the assets, in which Apollo Global Management LLC (APO.N: Quote, Profile, Research, Stock Buzz), Bain Capital LLC, Golden Gate Capital LLC and Rhone Group LLC are also participating, is now in its second round, with meetings with management taking place, the people said.
The sources spoke on the condition of anonymity because the process is confidential. Some of the persons spoke on Monday and others spoke in recent days.
Rockwood has packaged its Sachtleben titanium dioxide unit with its color additives units and is hoping to sell or spin off the businesses by the end of the year. Rockwood previously tried to sell just Sachtleben, which yielded little interest, people familiar with the matter told Reuters earlier this year.
Combined earnings before interest, taxes, depreciation and amortization (EBITDA) at the businesses was around $300 million in 2012, three of the sources said. The assets could fetch between $1.5 billion and $2 billion, they added.
Sachtleben’s EBITDA has dipped in 2013. While the company has said it believes the business has hit the bottom of an earnings trough, some private equity buyers are not convinced about the rebound, sources said. One source said that EBITDA for the combined businesses for the 12 months ending in June is around $200 million.
The business could bring in five to seven times forward EBITDA, the sources said.
Rockwood, Blackstone, Apollo, Advent, Golden Gate and Bain declined to comment. Rhone did not respond to a request for comment.
Titanium dioxide particles reflect light, creating the whiteness in paints and car coatings. Their products are also used to protect wood or plastic surfaces from bleaching out, as sunblock in skin cream, and to take the shine out of synthetic fibres.
The titanium dioxide industry – whose largest players include Dupont (DD.N: Quote, Profile, Research, Stock Buzz), Saudi Arabia’s Cristal Global, Tronox Ltd (TROX.N: Quote, Profile, Research, Stock Buzz) and Huntsman Corp (HUN.N: Quote, Profile, Research, Stock Buzz) – has been on a roller-coaster ride in recent years.
Huntsman is also exploring options for its titanium dioxide business.
Producers slashed capacity in 2009 during the economic crisis, only to see demand rebound and product prices soar in 2010 and 2011, driven by automotive demand. As idled plants came back on stream, prices came under pressure again in 2012.
The performance additives unit produces color pigments which are sold to firms making paint and clay additives which can be used to improve the characteristics of building materials.
Home construction has begun its recovery from a rut that preceded the worst recession since the Great Depression, adding to U.S. economic growth last year for the first time since 2005.
Rockwood has also put Germany-based CeramTec up for sale and is reviewing bids by private equity firms Bain Capital, BC Partners and Cinven. CeramTec has a price tag of around 1.4 billion euros ($1.80 billion), people familiar with the matter said.Get your FREE trial or subscribe now to Buyouts to find new deal opportunities, super-charge your fundraising efforts and track top managers.