April 1, 2014 / 7:35 PM / in 4 years

Exclusive: Chemical distributor Univar explores IPO - sources

NEW YORK (Reuters) - Univar Inc, the largest chemicals distributor in North America, is exploring an initial public offering that could value the private equity-owned company at more than $6 billion, according to people familiar with the matter.

Univar’s preparations for a possible public offering highlight the resurgence of the U.S. chemicals sector, which has benefited from cheap feedstock on the back of low natural gas prices.

Univar, which was valued at around $4.2 billion when buyout firm Clayton, Dubilier & Rice LLC (CD&R) joined CVC Capital Partners Ltd as an investor in the company in 2010, has interviewed investment banks in recent weeks to appoint IPO underwriters, the people said on Tuesday.

Univar recorded earnings before interest, tax, depreciation and amortization of more than $600 million in 2013, one of the people said, adding that earnings are expected to be higher this year.

All the people asked not to be identified because the deliberations are private. CVC and CD&R declined to comment, while a Univar spokeswoman did not immediately respond to a request for comment.

Univar operates a network of 260 distribution facilities around the world, represents more than 3,500 chemical producers, and has about 115,000 customers, according to its website.

The Redmond, Washington-based company had revenues of $9.9 billion for the 12 months to the end of June 2013, according to credit rating agency Moody’s Investors Service Inc.

    CVC took Univar private in 2007 for $2.1 billion and in 2010 CD&R acquired a 42.5 percent equity interest, leaving CVC with an equal stake and the remainder owned by management. In 2012, Univar appointed former water treatment products company Ecolab Inc (ECL.N) president Erik Fyrwald as its chief executive.

    Setbacks in certain key markets have impacted Univar’s revenue growth and pressured its profit margins, according to Moody‘s. To improve profitability, Univar is focused on cutting costs, organic growth opportunities and integration of some of its recent acquisitions, Moody’s said last September.

    Other private equity firms have also recently explored a sale of their chemical assets. Carlyle Group LP (CG.O), for example, is exploring an outright sale or IPO of its specialty chemical company PQ Corp, looking to fetch as much $3 billion, Reuters reported in December.

    Reporting by Greg Roumeliotis and Soyoung Kim in New York; Editing by Leslie Adler, Bernard Orr

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