UPDATE 1-Investcorp attracts bidders for Armacell - sources

Tue Jan 29, 2013 12:37pm EST

* Six bidders place tentative bids - sources

* Bids value Armacell at 400-500 mln eur - sources

* Final bids due mid-March - sources (Adds financing details)

By Arno Schuetze

FRANKFURT, Jan 29 (Reuters) - The sale of German insulation firm Armacell by its Bahrain-based private equity owner Investcorp has attracted six bidders as interest grows in companies making energy-efficient products, two people familiar with the transaction said.

Private equity investors Charterhouse, Pamplona, Equistone, HgCapital, Goldman Sachs Private Equity as well as a U.S.-based producer of building materials have placed tentative bids, the people said, adding final bids are due in mid-March.

The offers value Armacell, which makes insulation materials, at 400 million to 500 million euros ($538-$673 million), a discount to the valuations of peers, the people said.

The seller, seeking to capitalise on the heightened interest in energy-related investments, could still book a gain on the sale at those levels. According to media reports, Investcorp bought Armacell for 350-400 million euros in 2006.

Armacell Chief Executive Patrick Mathieu had told Reuters last year that he saw his company at the higher end of peers' EBITDA trading multiples of 7 to 9.

On that basis, Armacell would fetch a price of 490 million to 630 million euros as it expects to post earnings before interest, tax, depreciation and amortization of 70 million euros this year.

Bankers are working on debt financing packages of approximately 350 million euros to back a buyout should it go to a private equity firm. The debt will be provided either through senior leveraged loans, mezzanine debt or high yield bonds, bankers said.

Germany-headquartered Armacell says it is the world's largest maker of flexible insulation, claiming 40 percent of the market, with its products used to lag pipes and ductwork in large buildings such as factories and schools.

The company has annual sales of about 440 million euros, 60 percent of which stem from outside of Europe.

Investcorp, Charterhouse, Equistone and Goldman Sachs declined to comment, while the bidders were not immediately available for comment. ($1 = 0.7429 euros) (Additional reporting by Claire Ruckin in London; Editing by Victoria Bryan and Hans-Juergen Peters)