* Clariant divesting three low-margin units
* Private equity investors among bidders -sources
* Valuation seen at 4-5 times EBITDA
* Clariant shares up 0.9 percent at 1046 GMT
HELSINKI, Oct 11 Clariant's plan to
offload some of its unwanted operations was dealt a blow on
Thursday as Finnish chemicals group Kemira ruled
itself out of the bidding for the Swiss group's paper chemicals
Speciality chemicals group Clariant said in August it was
seeking to divest low-margin businesses such as the Textile
Chemicals, Paper Specialties and Emulsions, Detergents &
Intermediates units whose demand is too affected by economic
The three units have combined revenues of $2 billion.
A spokeswoman confirmed Kemira's decision on Thursday.
Clariant was not available for comment.
Industry analysts say the units will be hard to sell, citing
rival German group BASF'S failure last year to sell
its leather chemicals business, and as the manufacturing of such
products slowly shifts to emerging markets.
"In the present market environment I would expect difficult
negotiations over the price of the assets," said Jesko
Mayer-Wegelin, an analyst with HSBC Trinkhaus & Burkhardt.
"The company needs the divestments to reduce the cyclicality
of its business as planned."
Clariant Chief Executive Hariolf Kottman said in June the
company was planning to sell the units or find a joint venture
partner for the operations within the next 18 months. Citi
has been mandated to organise the auction.
Several private equity groups and strategic players
submitted indicative bids for the units at the beginning of this
month, two people with knowledge of the sales process said.
According to people familiar with the industry, private
equity investors such as H.I.G. Capital and Pamplona had
U.S.-based Ashland - with which Clariant already
works in foundry chemicals - has also been mentioned by bankers
as a possible buyer for the Paper Specialties unit while BASF is
seen as an unlikely bidder.
Bidders were likely to offer no more than 4-5 times earnings
before interest, taxes, depreciation and amortization (EBITDA),
the sources said.
Clariant's Performance Chemicals unit, which includes the
Paper Specialties unit, the Emulsions, Detergents &
Intermediates operations and the Additives business, posted
sales of 1.3 billion Swiss francs ($1.38 billion) and adjusted
EBITDA of 177 million in 2011.
The group's Textile Chemicals unit in 2011 had sales of 675
million francs and adjusted EBITDA of 34 million.