Blackstone, Bain and KKR are among the firms that have approached Industri Kapital ahead of next month’s information memorandum for the sale of explosives company Dyno Nobel.
IK selected Citigroup to review options for the business three weeks ago. A recapitalisation and an IPO are also under consideration, while interest from the buyout firms has not yet manifested into a firm approach.
“Dyno Nobel should be a very interesting opportunity for the financial sponsor community given the company’s strong market position in a sector undergoing growth and consolidation,” said Trygve Grindheim, a partner at IK, who worked on the deal.
IK acquired Dyno Nobel and Dyno Chemicals in August 2000 as part Dyno Industries. It merged the chemicals division with an existing portfolio company, Neste Chemicals, and went on to operate Dyno Nobel as a stand-alone concern.
Banking sources said that Dyno Nobel could sell for up to US$1.5bn, which compares favourably to the US$1.2bn price tag that IK paid for Dyno Industries as a whole. Additionally, that figure is based on valuations that were drawn up a few months ago, while Dyno Nobel has been trading better than expected in the interim.
IK refocused the business through divestiture of a number of non-core assets inherited from the time when Dyno Industries was a publicly traded conglomerate. It also streamlined operations and backed strategic add-on acquisitions to more than double operating profit as owners of the business.
Buyers or investors looking to buy into the company going forward are betting on a positive cycle for the mining industry. Profits are booming in the industry, which is a major customer for explosive manufacturers.