Issue Date: July 2, 2012 | Web Date: June 29, 2012
Clariant To Sell Three Businesses
The Swiss specialty chemical company Clariant plans to sell its emulsions, detergents, and intermediates business, as well as its paper specialties and textile chemicals businesses, before 2014. The three businesses have combined annual sales of $1.5 billion to $1.6 billion. They represent about 20% of Clariant’s sales but less than 10% of its earnings before interest, taxes, depreciation, and amortization (EBITDA). Clariant has appointed Citibank to advise it on the divestments.
Selling the businesses will contribute toward Clariant’s goal of increasing its EBITDA-to-sales ratio—a measure of profitability—from about 13% in 2011 to more than 17% in 2015, Clariant CEO Hariolf Kottmann says. When it comes to profitability, he says, “we want to be in the top quartile of the specialty chemical industry.”
Stock analysts at Morgan Stanley applaud the company’s growth strategy. They forecast that Clariant is set for “progressive improvement” in finances through the year and “sustained profitability” going forward. As part of an efficiency program launched in 2009, the company has reduced staff by 20% to about 22,000 employees, closed 20 manufacturing sites, and restructured itself into 11 business units.
The planned divestments are in line with the firm’s strategy to further increase efficiency and focus on high-growth businesses. Exiting the businesses would reduce Clariant’s exposure to cyclical industries to less than 30% of sales. The company plans to use proceeds from the divestments to pay down debt, much of which it accrued from acquiring Süd-Chemie, a German catalysts and adsorbents company, in April 2011 for $2.8 billion.
Meanwhile, the integration of Süd-Chemie “is going very well” and is set to be “transformational” for the Swiss firm, Kottmann says. The acquisition provides Clariant access, for the first time, to technologies for producing specialty chemicals from biobased materials. After the start-up of a pilot plant project in July, Clariant will look for a partner to invest $250 million to $300 million to build a larger facility for demonstrating new biotechnology processes, Kottmann adds.
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