March 6, 2018 / 4:11 PM / 13 days ago

Ardian to put chemicals group Italmatch up for sale: sources

FRANKFURT (Reuters) - Buyout group Ardian is considering options including a potential sale for its Italian chemicals maker Italmatch as it seeks to lock in high sector valuations, people close to the matter said.

The private equity firm has held early stage conversations with some potential buyers for the company seen worth some 600 million euros ($744 million), they said.

A formal auction process will likely be launched in the second half of this year, they said, adding that Ardian is expected to mandate a sell-side adviser before the European summer.

Ardian will likely shop Italmatch to peers such as Lanxess (LXSG.DE) and investors such as Cinven [CINV.UL], Rhone Capital or Platinum, which vied for Israel Chemicals’ (ICL) (ICL.TA) fire safety and oil additives units. That company was bought by SK Capital for about $1 billion in December.

Ardian declined to comment.

Ardian acquired Italmatch - a maker of additives for the lubricants and plastics industries as well as specialty chemicals and cosmetics - in 2014 for 220 million euros, according to media reports.

Since the buyout, the company has grown through a series of acquisitions, including the 2016 purchase of North American phosphonate and biocides maker Compass Chemicals and the 2015 acquisition of Solvay’s (SOLB.BR) water additives business.

    After posting earnings before interest, tax, depreciation and amortization (EBITDA) of 65 million euros last year, Italmatch is expected to see core earnings rise to more than 70 million euros this year.

    Potential buyers expect Italmatch to be valued at 560-630 million euros or 8-9 times its expected core earnings, the people close to the matter said.

    Valuations in mergers and acquisitions of specialty chemicals groups have risen over recent years as companies have tried to expand in complex high-margin products, customized to users’ needs, while shedding commodity businesses.

    Reporting by Arno Schuetze, Pamela Barbaglia and Stephen Jewkes; Editing by Adrian Croft

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