Sulzer launches sale of coatings unit Metco - sources

FRANKFURT/ZURICH, Sept 18 Wed Sep 18, 2013 12:04pm EDT

FRANKFURT/ZURICH, Sept 18 (Reuters) - Swiss machinery manufacturer Sulzer has launched the sale of its Metco unit which it hopes could fetch about 800 million Swiss francs ($864.44 million), two people familiar with the process said.

Last week, Sulzer sent out information packages on Metco, the world's largest maker of thermal spray coatings, catering to the car, chemicals and energy industries, the people said. It has asked for tentative bids by a mid-October deadline, they added.

Sulzer is selling Metco to concentrate on more lucrative businesses making pumps, equipment and services for the oil and gas industry.

The group has approached peers like Swiss Oerlikon, British Bodycote, U.S.-based Praxair, and Japanese IHI Corp, the sources said.

Russian tycoon Viktor Vekselberg owns a stake in both Sulzer and Oerlikon. While rival bidders see Oerlikon as the main contender in the auction, it remains unclear if an acquisition of Metco is actually high on his agenda. One person familiar with the transaction said Vekselberg had given other projects a higher priority.

Separately, private equity groups like Clayton Dubilier & Rice, EQT, Carlyle, Bain, Permira, CVC, and Advent have been asked to look at the asset, they added.

A deal at that price would value Metco at 8.7 times of Ebitda, slightly higher than Bodycote or IHI, which trade at 7.5 and 8.3 times Ebitda respectively.

Metco had annual sales of 690 million francs and earnings before interest, tax, depreciation and amortization of 91.7 million francs last year.

Sulzer didn't comment on the specifics of the sale process beyond saying it was ongoing, and that the firm hasn't set a deadline.

Swiss bank Credit Suisse, which is organising the auction, declined to comment.

Sulzer said in July it was looking to sell Metco as part of a restructuring. Sulzer's shares slid after it flagged a drop in full-year profit following low order volume and high restructuring costs in the first half.

The Metco peers and buyout groups declined to comment; IHI, Praxair and Bodycote could not immediately be reached for comment.

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