FRANKFURT Bahrain-backed private equity group Investcorp has mandated Barclays (BARC.L) to organize the sale of Armacell, a maker of insulation materials, aiming to capitalize on growing investor interest in energy-efficient products.
"We hope to enter exclusive negotiations with one bidder early next year and close the deal by the end of the first quarter," Armacell Chief Executive Patrick Mathieu told Reuters, adding that Barclays has helped line up talks with several private equity investors and strategic players.
"In my eyes, it is worth more to a private equity investor than to a strategic one," Mathieu said, adding that financial investors were more likely to be able to stump up more cash to drive Armacell's expansion.
German-headquartered Armacell says it is the world's largest maker of flexible insulation, claiming 40 percent of the market, with its products used to lag pipes and ductwork in large buildings such as factories and schools.
"Our two main growth drivers are sound absorption products and a push into Asia and Russia," Mathieu said.
The company's sales grew about 50 percent in the five years since Investcorp bought the business in 2006 to some 441 million euros ($574 million) expected this year, as regulations governing the energy efficiency of buildings have become stricter in many parts of the world.
It generates about 60 percent of group sales outside of Europe, which Mathieu said made Armacell more resilient to any economic downturn in the region, and is benefiting from a shift to high-tech products from traditional insulation materials.
In 2013, Armacell expects to post earnings before interest, tax, depreciation and amortization (EBITDA) of 70 million euros, up from 64 expected for 2012.
"Our peers trade at (EBITDA) multiples of 7-9," Mathieu said. "We see ourselves at the higher end of this range."
If valued accordingly, Investcorp - which according to media reports bought Armacell for 350-400 million euros in 2006 - could fetch a price tag of up to 630 million euros in the sale.
Armacell could be interesting for industrials groups such as 3M (MMM.N), BASF (BASFn.DE), or foams-to-plastics group UFP Technologies (UFPT.O), sources close to the transaction said.
Investcorp declined to comment.
($1 = 0.7679 euros) (Reporting by Arno Schuetze)