Solvay taps Credit Suisse for chemical unit sale - sources

NEW YORK Fri Feb 28, 2014 3:32pm EST

NEW YORK Feb 28 (Reuters) - Chemical producer Solvay SA has hired Credit Suisse Group to find a buyer for its sulfuric acid unit and approached private equity firms about a deal that could reach $800 million, according to three people familiar with the matter.

An auction for the unit, referred to as eco services, started this week, the people said. Eco services has annual earnings of around $110 million before interest, tax, depreciation and amortization, or EBIDTA, one of the people added.

Solvay said on Wednesday it would explore strategic options for the unit but did not give more details. A Solvay spokeswoman did not respond to a request for comment on the details of the sale. A Credit Suisse spokesman declined to comment.

Solvay's eco service business produces and regenerates sulfuric acid, which is used as a catalyst at refineries in the production of high-octane gasoline.

The unit is a supplier to the largest refineries on the U.S. West Coast, along the U.S. Gulf of Mexico and in the U.S. Midwest and Canada, according to its website. It accounted for 9 percent of Solvay's net sales of 3.13 billion euros ($4.32 billion) in 2013.

In a conference call with analysts to discuss the company's earnings on Wednesday, Solvay Chief Executive Jean-Pierre Clamadieu said a sale of eco services would simplify Solvay and allow it to reallocate resources to fast-growing businesses.

"I think this business could be qualified as a cash cow or a sustainable cash generator to use a nice terminology," Clamadieu said about eco services.

Private equity has shown a strong appetite for unloved divisions being carved out of companies, seeking to avoid frothy auctions for companies amid buoyant equity capital markets.

In the chemical sector, Clayton, Dubilier & Rice LLC last week struck a $1.8 billion deal to buy the water technology unit of U.S. chemical manufacturer Ashland Inc.