BASF, Others, In Talks To Buy Cognis
The owners of Cognis, the German maker of additives for cosmetics and detergents, are in talks with several parties including BASF to sell it, two people close to the negotiations said on Friday.
Permira and co-owner Goldman Sachs Capital Partners, which turned down takeover offers for Cognis as too low in 2006, aim to fetch a sale price of at least €3.5 billion including debt, one of the people said. Cognis had about €2 billion of debt at the end of 2009. The world's largest chemical maker BASF, Permira and Goldman Sachs declined to comment. Cognis was not immediately available for comment.
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 other potential buyers are. UniCredit analysts said buying Cognis would help BASF catch up to rival Bayer in Germany and compete with Dow Chemical, the No. 2 supplier in the coating industry.
They cited Evonik and Belgian chemical company Solvay as other potential candidates to buy Cognis. Evonik Chief Executive Klaus Engel has said that he would look at Monheim, Germany-based Cognis as a matter of routine. Solvay recently sold its pharmaceutical operations to Abbott Laboratories, leaving it flush with cash. "In the case of more than one interested party the deal might be done sooner than later," they said, adding they see Cognis' enterprise value at €2.7-3.0 billion.
Sale More Likely
Financial industry sources had 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. Cognis, which is the former unit of glues and detergent maker Henkel, has negative equity with liabilities exceeding assets by €793 million as of September.
Cognis has also been preparing for an initial public offering in the second half of this year, but sources said that an outright sale was now more likely than flotation. Several buyout firms have been tapping into recovery appetite for chemical-sector assets in Europe such as chemicals distributor Brenntag, which raised €747.5 million in an IPO last month.
