Rockwood to combine two units in possible $2 bln sale -sources

Wed Mar 20, 2013 1:27pm EDT

* Sachtleben, performance additives to be sold together

* Seller hoping for price tag of more than $2 billion

* First round bids due in late April

By Michael Erman and Arno Schuetze

NEW YORK/FRANKFURT, March 20 (Reuters) - Specialty chemicals producer Rockwood Holdings Inc is preparing to launch a sale of two units that could fetch more than $2 billion, hoping to benefit from an uptick in the U.S. construction sector, people familiar with the matter said.

After yielding little interest for its Sachtleben unit in earlier auctions, Rockwood is now offering to sell its performance additives alongside the German titanium dioxide business, the people said.

First bids for the combined businesses are due at the end of April and, according to one of the people, could come in at more than $2 billion - or 6.7 times earnings before interest, taxes, depreciation, and amortization.

The assets, which Rockwood believes can create significant synergies by merging, are likely to attract interest mainly from private equity firms, the people said.

Potential bidders include Bain Capital, Permira, Blackstone Group LP and EQT, the people said, asking not to be named because details of the process are not public.

The private equity firms, and Lazard, which is organising the sale, declined to comment. Rockwood did not immediately respond to requests for comment.

Finnish chemicals group Kemira agreed to sell its 39 percent stake in the Sachtleben joint venture to partner Rockwood last month, allowing the company to proceed with the divestiture.

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 - with Dupont, Saudi Arabia's Cristal Global, Tronox and Huntsman as the largest players - has been on a roller coaster ride in recent years.

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.

Separately, Rockwood is also selling its industrial ceramics unit CeramTec, with first round bids due next week, people familiar with the deal said.

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