Sulzer’s Metco Said to Draw Interest From Oerlikon, IHI

Sulzer AG (SUN)’s Metco coatings unit is drawing interest from potential buyers including OC Oerlikon Corp. (OERL), Praxair Inc. (PX) and IHI Corp. (7013), according to people familiar with the matter.

The Winterthur, Switzerland-based pump-maker will start the auction in September and may fetch as much as 900 million francs ($970 million), according to the people, who asked not to be identified because the talks are private. Swiss rival Oerlikon, Praxair of the U.S. and Japan’s IHI may consider bids and private-equity firms have also shown interest, they said.

“We are in talks with a large number of candidates,” Verena Goelkel, a spokeswoman for Sulzer, said by phone, declining to name specific companies. Credit Suisse AG (CSGN) is advising Sulzer on the sale, she said.

Sulzer Chief Executive Officer Klaus Stahlmann has said he hopes to sign a deal for the coatings business as early as this year to concentrate on three remaining units, which sell pumps, repair services for gas and steam turbines and equipment for oil refineries. Metco had earnings before interest, taxes, depreciation and amortization of 92 million francs last year.

Sulzer today rose as much as 1.2 percent in Zurich trading, valuing the company at 4.7 billion francs, while IHI dropped as much as 7.6 percent in Tokyo. Praxair yesterday gained 0.3 percent in New York.

Coating Deals

Sulzer is selling Metco, which makes protective spray coatings for car parts, aircraft engines and tools, after making it the world’s largest maker of thermal-spray coatings with about 40 acquisitions since 1985.

Japan’s IHI agreed to buy Swiss physical vapor deposition-spray maker Ionbond in September. Pfaeffikon, Switzerland-based Oerlikon, whose largest shareholder Viktor Vekselberg is also the biggest investor in Sulzer, is looking to expand with coating deals, Patrick Laager, an analyst at Credit Suisse, wrote in an e-mail to investors yesterday.

“Oerlikon may opt for a mid-to-large-sized acquisition within about the next nine months adding external growth to its coating and vacuum divisions,” he said.

Oerlikon won’t speculate about a possible transaction, interim Chief Executive Officer Juerg Fedier said in a phone interview yesterday. Praxair spokeswoman Sue Neumann and IHI spokesman Toyoshi Kodama both declined to comment.

To contact the reporters on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net; Aaron Kirchfeld in London at akirchfeld@bloomberg.net

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

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