Private equity firm SK Capital Partners may have won the auction for Clariant AG's (SWX: CLN) textile chemicals, paper specialties and emulsions businesses with a $500 million bid, but that deal is only the beginning.
Clariant based in Basel, Switzerland, had planned to sell up to five of its divisions by the end of 2013, but ended up selling three out of five businesses put up for disposal to U.S. buyout firm SK Capital for 502 million Swiss francs ($550 million), beating the set deadline. Those early divestitures gave a year-end boost to Clariant chief executive officer Hariolf Kottmann as he presses ahead with plans to divest the two remaining businesses.
As for SK Capital, managing director Barry Siadat says the firm had been in talks with Clariant since May.
"The discussion preceded the auction process," he tells Mergers & Acquisitions, adding that he expects the deal to complement SK Capital's existing position as a supplier to the global fibers market and the U.S. paper industry. The transaction is expected to wrap up by late June.
The businesses SK Capital is currently buying generate revenues of about $1.3 billion, while the price tag is 6.3 times estimated 2012 Ebitda. SK Capital will assume certain pension liabilities in connection with the deal.
The New York and Boca Raton-based firm focuses on the specialty materials, chemicals and healthcare sectors. Its portfolio companies include Aristech Acrylics, Calabrian Corp. and IBA Molecular.