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Wendel Sale of Materis Division Said to Stall After Bids Too Low

Wendel (MF)’s sale of part of building materials supplier Materis SA has stalled after bids didn’t meet the company’s expectations, three people with knowledge of the matter said.

Buyout firm Astorg Partners SAS submitted a bid for aluminates maker Kerneos, while Axa Private Equity pulled out of the sale process, said the people, who asked not to be named because the information isn’t public. Imerys SA (NK) also expressed an interest, they said.

Wendel aim to get as much as 700 million euros ($883 million) for Kerneos and it is also sounding interest in Chryso, another Materis unit that makes cement-admixtures, people familiar with the matter said in April. The bids for Kerneos weren’t firm offers, and talks may resume at a later stage, one of the people said today.

Concerns that Europe’s sovereign debt crisis and volatile financial markets are harming Europe’s economic recovery weighed on Wendel’s attempt to exit the Materis businesses, acquired in 2006. Materis had planned to sell at least one of four divisions to reduce its 1.9 billion-euro debt. Maturities were extended last May in exchange for higher interest payments.

“Wendel and Materis pursue the strategic review of Materis’ portfolio, with a view to selling a business in the coming year if the numerous expressions of interest resulted in an attractive offer under favorable financial and industrial terms,” Wendel said today in a statement.

A spokeswoman for Wendel declined to comment further on the sales.

Indicative Bids

Kerneos, which makes cement aluminates, had sales of 360 million euros last year, up 8 percent on a like-for-like basis. Its products are used as binders for cement used in construction, pipe anti-corrosion protection, refractories and steel production.

Materis’ other three divisions make mortars, admixtures and paints. Wendel has also received indicative bids from industrial and financial buyers for cement admixtures maker Chryso, two of the people said. Chryso had sales of 234 million euros in 2011.

As part of the May agreement with Materis’s 199 lenders, Wendel and its co-investors agreed to inject 25 million euros of equity to finance Materis’ development. Wendel also agreed to provide a 25 million-euro liquidity line which may be raised to 50 million euros in 2013, and would be canceled and repaid after the sale of one of the company’s divisions.

Wendel, which is based in Paris, bought the company for about 2 billion euros six years ago, according to data compiled by Bloomberg. Wendel and Materis’s managers had to inject 45 million euros of cash in 2009 as part of a first debt restructuring.

To contact the reporters on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net; Anne-Sylvaine Chassany in London at achassany@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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