Owners of Germany's Cognis prepare for sale: source

By John O'Donnell and Frank Siebelt

FRANKFURT (Reuters) - The owners of German chemicals group Cognis are gearing up for their second attempt to sell the business later this year, a source with direct knowledge of the matter said.

The company comes with a price tag of roughly 3 billion euros ($4.6 billion), the source said, making it the biggest deal in German chemicals since 2006.

Industry insiders said the auction would interest trade buyers such as Dow Chemicals (DOW.N: Quote, Profile, Research, Stock Buzz) and BASF (BASF.DE: Quote, Profile, Research, Stock Buzz).

Cognis, which makes ingredients for L'Oreal (OREP.PA: Quote, Profile, Research, Stock Buzz) cosmetics and Becel low-cholesterol margarine, is owned by Permira, one of Europe's biggest private equity investors, and Wall Street titan Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz).

Its owners, the source said, have already had informal contact with would-be buyers for the group that makes chemicals used in products ranging from anti-wrinkle cream to paint.

Goldman Sachs, Permira, Dow and BASF declined to comment. Cognis, however, said its owners could sell up after Cognis has completed the disposal of two businesses, Oleo and Pulchra, which are being squeezed by Asian competition.

This is the owners' second attempt since 2006 to find a new home for Cognis. They have taken out more than 800 million euros in dividends. At the end of 2006 Cognis had debt of more than 2 billion euros.

The owners had also examined a stock-market flotation -- an option now ruled out in the face of tough markets, the source said.