Clariant Said to Mull South African Water Business Sale

Clariant AG (CLN) plans to sell a South African-based business supplying chemicals for treating water and is in talks with potential buyers, according to two people with knowledge of the situation.

The asset may be valued at as much as $50 million and Johannesburg-based explosives and chemicals company AECI Ltd. (AFE) is among the suitors, said one of the people, who asked not to be identified because the process is private.

Clariant Chief Executive Officer Hariolf Kottmann, who acquired the water-treatment unit through the purchase of German catalyst maker Sued-Chemie for about $2.3 billion in 2011, has been revamping the company to make it less dependent on commodity chemicals. Kottmann has said the future of the Muttenz, Switzerland-based company lies in higher-margin areas such as ingredients for cosmetics, rather than the emulsions, paper- and textile-chemical operations that it recently sold.

“Clariant’s water treatment is a subscale business inherited from Sued-Chemie,” Patrick Rafaisz, an analyst at Bank Vontobel AG in Zurich, said by phone. “Most of the business is linked to large accounts in South Africa.” The asset’s sales may have declined to about 50 million to 60 million francs ($66 million) in 2013 from 84 million euros ($114 million) in 2010, according to Rafaisz’s estimates.

A representative for Clariant declined to comment. AECI said in a e-mailed statement that it has identified the water treatment process, equipment and chemicals industry as a strategic growth area and is evaluating “opportunities to advance its footprint in this sector on an on-going basis.”

A buyer of Clariant’s South African water business may use the asset to expand in the African market for treating industrial waste water, tapping growth in the local mining industry. The asset also provides bespoke solutions for purifying and conditioning recirculated water used in feed boilers.

To contact the reporters on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net; Patrick Winters in Zurich at pwinters3@bloomberg.net

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

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