Clariant Sells Three Businesses To SK Capital For $550 Million

The Swiss specialty chemical maker Clariant will sell three businesses to SK Capital Partners, a private equity firm, for $550 million. Clariant is selling the businesses—in textile chemicals, paper specialties, and emulsions—as part of a three-year portfolio revamp to focus on markets that offer strong growth potential. This move is part of a general trend of mergers and acquisitions driven by chemical makers’ attempts to jettison noncore units.

Clariant put the units up for sale in June. It will use the proceeds of the sale to pay down debt, much of it from its 2011 acquisition of the German firm Süd-Chemie.

The Swiss company’s target had been to sell the three businesses by the end of 2013, so it is ahead of schedule. “By the end of 2013, Clariant will be an even more profitable company than today, generating a majority of sales in noncyclical growth businesses,” says CEO Hariolf Kottmann. Clariant’s portfolio now contains specialties such as catalysts, plastics additives, and personal care ingredients.

Together, the divested businesses have 25 facilities around the world and approximately 3,000 employees. Clariant estimates they will generate $1.3 billion in revenue in 2012 from products including dyes, pigments, emulsions, and surface chemicals. The company is still planning to sell its leather services and detergents and intermediates businesses.

SK will add the purchase to its growing stockpile of chemical operations, many of which have been cast off by large chemical companies like Clariant. The firm struck three deals in 2012 alone, including the $700 million purchase of TPC Group, a maker of butadiene and other C₄ chemicals, in partnership with First Reserve, another private equity firm.

SK Managing Director Barry Siadat explains that the Clariant businesses are a good fit for SK’s strategy. “We specialize in investing in businesses that we believe have a strong pedigree in terms of brand, technology, customers, and market position,” Siadat tells C&EN. “In addition, we wanted to grow in construction, paper, and textile chemicals because we have significant business in these areas.” SK will continue to operate its various acquisitions as stand-alone entities, he adds.

Acquisitions of chemical businesses by private equity firms increased in the latter half of 2012, according to the consulting firm PricewaterhouseCoopers. In the third quarter, deals by financial investors accounted for more than one-third of total acquisitions, PwC reports, including the Carlyle Group’s $4.9 billion purchase of DuPont’s performance coatings unit.