BASF, Others In Talks To Buy Cognis

FRANKFURT (Reuters) – The owners of Cognis, the German maker of additives for cosmetics and detergents, are in talks with several parties including BASF (BASF.DE) to sell it, two people close to the negotiations said on Friday.

Permira and co-owner Goldman Sachs Capital Partners (GS.N), which turned down takeover offers for Cognis as too low in 2006, aim to fetch a sale price of at least 3.5 billion euros ($4.68 billion) including debt, one of the people said.

Cognis had about 2 billion euros of debt at the end of 2009.

The world’s largest chemical maker BASF, Permira and Goldman Sachs declined to comment. Cognis was not immediately available for comment.

Talks with all parties are still at an early stage and could take months to complete, both of the sources said, without providing details on who other potential buyers are.

UniCredit analysts said buying Cognis would help BASF catch up to rival Bayer (BAYGn.DE) in Germany and compete with Dow Chemical (DOW.N), the No. 2 supplier in the coating industry.

They cited Evonik and Belgian chemical company Solvay (SOLB.BR) as other potential candidates to buy Cognis.

Evonik Chief Executive Klaus Engel has said that he would look at Monheim, Germany-based Cognis as a matter of routine. Solvay recently sold its pharmaceutical operations to Abbott Laboratories (ABT.N), leaving it flush with cash.

“In the case of more than one interested party the deal might be done sooner than later,” they said, adding they see Cognis’ enterprise value at 2.7-3.0 billion euros.

SALE MORE LIKELY

Financial industry sources had told Reuters on March 16 that Permira and Goldman Sachs were hoping to woo specialty chemical makers such as Lanxess (LXSG.DE) and Evonik [EVON.UL] to end their troubled investment in Cognis.

Cognis, which is the former unit of glues and detergent maker Henkel (HNKG_p.DE), has negative equity with liabilities exceeding assets by 793 million euros as of September.

Cognis has also been preparing for an initial public offering in the second half of this year, but sources said that an outright sale was now more likely than flotation.

Several buyout firms have been tapping into recovery appetite for chemical-sector assets in Europe such as chemicals distributor Brenntag (BNRGn.DE), which raised 747.5 million euros in an IPO last month. (Reporting by Philipp Halstrick and Frank Siebelt; Writing by Maria Sheahan, editing by Will Waterman, Bernard Orr) ($1=.7477 Euro)