Clariant Said to Consider Leather Options With Wendel’s Stahl

Clariant AG (CLN) and Wendel SA (MF) are considering options for their leather-chemical businesses that include a merger or an outright purchase by the French private equity firm, four people with knowledge of the situation said.

Clariant is looking to divest its leather unit, yet would consider a tie-up with Wendel’s Stahl Holdings if such a venture offers more value than bids for the whole business, said the people, who asked not to be named because details of the sale process and negotiations are private.

Chief Executive Officer Hariolf Kottmann also plans to divest Clariant’s detergent and intermediates unit by year-end. Stahl would probably be Kottmann’s preferred partner for a merger as their portfolios are the most compatible, according to Berenberg analyst Jaideep Pandya. BASF SE, TFL Holding GmbH, and Lanxess AG (LXS) are among the world’s five biggest suppliers of treatments that prepare hides for car seats, bags and shoes.

Clariant declined to comment, while a Wendel representative had no immediate comment.

Opting for a joint venture would take longer, with double the due diligence as each party evaluates the other’s operations and additional decisions such as determining the chief executive and management teams for the merged entity.

Clariant’s leather services business has 12 production sites and the business may fetch 158 million francs ($166 million) in an outright sale, Berenberg’s Pandya said. Sales at Stahl, 92 percent owned by Wendel, rose 8 percent last year to 361.2 million euros ($471 million), with a profit margin widening to 15.2 percent from 13.5 percent.

Elusive Exit

Kottmann is attempting to secure an exit from leather chemicals that has so far eluded other players in the about $5 billion industry.

The five European leather chemical companies, which each have about 10 percent global market share, have suffered as Asian rivals added capacity while auto production and demand for some consumer goods has weakened in parts of Europe.

BASF SE (BAS) struggled to find a satisfactory buyer and abandoned its sale process. TFL, taken over by creditors, remains in a prolonged sale process as it struggles to get bids that will satisfy some debt holders.

Lanxess, which is backwardly integrated into chromium used in treating leather, is seen as a potential consolidator in the market.

For Clariant, the divestment is part of Kottmann’s transformation of the Swiss company to focus on more profitable areas like agrochemicals and ingredients for shampoos and moisturizers. The CEO still has to negotiate the final terms of an agreed sale of textile, paper and emulsion businesses to SK Capital for about 502 million francs.

To contact the reporters on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net; Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net; Andrew Noel in London at anoel@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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