U.S specialty chemicals maker Lubrizol has joined other potential bidders in talks to buy German additives group Cognis , a source close to the matter told Reuters.

The Financial Times paper had earlier reported that Lubrizol had approached Cognis for talks about a takeover that could value the target at around €3 billion. The talks with Lubrizol are at an early stage and have not yet produced an offer, the source said on Wednesday. Lubrizol declined to discuss the alleged Cognis bid.

"It's our corporate policy that we do not comment on market rumors," Lubrizol spokeswoman Julie Young said.

Lubrizol makes lubricants for engines and personal-care products, among other items. Cognis makes additives for food and cosmetics, a portfolio that in theory could dovetail nicely with Lubrizol's.

The owners of Cognis are also in sale talks with several parties, including German chemicals group BASF, two people close to the negotiations told Reuters on Friday. BASF Chief Financial Officer Kurt Bock told Reuters last month that his company had no interest in buying Cognis because it was busy integrating Swiss rival Ciba after acquiring it in 2009.

Permira and co-owner Goldman Sachs Capital Partners, which turned down takeover offers for Cognis as too low in 2006, aim to attract a sale price of at least €3.5 billion, one of the people said.

None of the companies have commented on the transaction.

Talks with all parties are still at an early stage and could take months to complete, both of the sources said, without providing details on who the other potential buyers may be. Financial industry sources told Reuters on March 16 that Permira and Goldman Sachs were hoping to woo specialty chemical makers such as Lanxess and Evonik to end their troubled investment in Cognis.

Analysts view Belgium's Solvay and Dutch group DSM as potential suitors as well. Britain's Croda declined to comment on whether it had expressed interest. Cognis, the former unit of glues and detergent maker Henkel, specializes in products based on natural oils and fats, which have higher margins and are less cyclical than those based on volume chemicals.

But its negative equity and €1.9 billion of net debt at the end of last year could deter some potential buyers. The move comes as several buyout firms try to float chemical-sector assets in Europe such as chemicals distributor Brenntag, which raised €747.5 million in an IPO last month.

UniCredit analyst Jochen Schlachter valued Cognis at seven to 8.5 times earnings before interest, tax, depreciation and amortization (Ebitda).

"Assuming Ebitda rises to around €380 million  this year you get a business value of around €3 billion," he noted. Cognis boosted 2009 Ebitda 4% to €364 million on sales of €2.6 billion. Credit Suisse analysts said a buyer could reap synergies of 5-10% of Cognis sales, or €140 million to €280 million. Silvia Quandt Research analysts thought Cognis would be a good fit for BASF.

"We believe that Cognis would make lots of strategic sense for BASF," with a purchase contributing to earnings in the second year after the deal closes. But DZ Bank warned BASF against overpaying. "We would have serious concerns about a purchase price of €3.5 billion or over as it would very probably lead to a two-year dilution," it said in a research note. "Moreover, unlike in the case of Lubrizol, we see a disadvantage for BASF insofar as 56% of Cognis sales are generated in Europe, and only 23% are generated in the growth markets of Asia and South America."