- Expected to sell for at least 7.1x EBITDA
- Business generates $28 million in EBITDA
- Part of ongoing move to shed units
The unit generates about $28 million a year in EBITDA and could fetch a price of $200 million, or at least 7.1x EBITDA, two sources said. The auction, being handled by advisory firm Valence Group, has come down to a handful of final bidders, including sponsors.
Sodium Borohydride is part of the Dow Performance Additives product line, which Dow Chemical acquired when it bought Rohm and Haas in 2009, according to Dow Chemical’s website. It is used in the making of other chemicals, many of them earmarked for pharmaceutical and agricultural applications.
Dow Chemical recently said it’s targeting $4.5 billion to $6 billion in proceeds from the sale of non-strategic assets and businesses by year-end 2015. Response to the company’s carve-out of its chlorine business, also in the works, “has been positive with strong early interest,” Dow Chemical CEO Andrew Liveris said on the company’s July 23 conference call with Wall Street analysts.
Dow Chemical’s second-quarter profit fell 62 percent to $882 million, or 73 cents a share, from $2.34 billion, or $1.87 a share in the year ago period, which included money received in an arbitration award related to a 2008 petrochemical venture in Kuwait. Revenue rose by 2 percent to $14.92 billion.
Activist investor Daniel Loeb has been putting pressure on Dow Chemical to deliver more value to shareholders, while rival chemical firm DuPont has also been facing calls to return cash to investors.
A spokesman for Dow Chemical declined to comment on the Sodium Borohydride deal.
The chemical sector routinely draws strong participation from private equity firms. Among sponsor-backed deals in recent months are the following:
- American Securities LLC said in June it would buy specialty chemicals maker Emerald Performance Materials from Sun Capital Partners Inc in a deal valued at more than $1 billion, according to a report by sister wire service Reuters. The transaction closed on Aug 1.
- Koch Industries and GS Capital Partners, the private equity arm of Goldman Sachs, in April moved to buy Flint Group, a maker of printing ink, from CVC Capital Partners in a deal with a reported value of $3 billion.
- In a mid-market transaction, Arsenal Capital Partners in March paid an undisclosed sum for oil and gas production chemical maker Danlin Industries to seller Hastings Equity Partners.