FRANKFURT U.S. chemicals maker Rockwood Holdings Inc ROC.N is looking to sell its industrial ceramics unit and is likely to draw interest from large buyout firms, people close to potential suitors said.
Rockwood is focusing on lithium for batteries and has hired Lazard (LAZ.N) to run the ceramics auction, likely to raise some $1.7 billion, the sources said.
The U.S. group will soon provide data on the unit, known as CeramTec, to prospective buyers, mainly large financial investors such as CVC CVC.UL, Bain, Advent, Permira PERM.UL and Blackstone (BX.N), the sources said on Tuesday.
Information memorandums are expected to be circulated in two to three weeks.
Lazard and the private equity investors declined to comment. A Rockwood spokeswoman also declined to comment.
In its statement on fourth-quarter earnings on Tuesday, Rockwood Chief Executive Seifi Ghasemi described the company's Lithium and Surface Treatment units as "our two core businesses," without including the ceramics unit in that category.
CeramTec, whose ceramics go into thousands of products from filters for water treatment to electronic components in factory robots, will likely be offered for about $1.7 billion, one person familiar with Rockwood's plans said.
That would be a multiple of 10 times CeramTec's recent earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for one-offs.
The Germany-based unit, which was founded in 1903, had sales of $548 million in the 12 months through September and adjusted EBITDA of $173 million.
Rockwood's restructuring has already led to it buying back Kemira's (KRA1V.HE) stake in German titanium dioxide joint venture Sachtleben.
Sources had earlier this month told Reuters that the specialty chemicals producer was renewing efforts to hive off Sachtleben. But the CeramTec sale is now expected to come first.
Rockwood's focus on lithium is driven by the advent of lithium batteries used in cars to cut carbon emissions. The rising popularity of smartphones and tablets, which need longer-running batteries, is also fuelling lithium demand.
Last year, however, Rockwood lost out to a rival bidder when it tried to snatch up Talison Lithium Ltd TLH.TO.
(Editing by David Holmes)