Altana Chief Says Valuations Hampering Pursuit of Fifth Division
Altana AG Chief Executive Officer Matthias Wolfgruber said his search for an acquisition to add a fifth division to the German chemicals maker is being hampered in part by the high price tags placed on potential targets.
“You can often find attractive targets that are unavailable or available at too high a price,” the CEO said in a phone interview. “Very clearly we talk to people. But we can only do it if everything falls into place.”
The maker of coatings additives, owned by Susanne Klatten, has 1.5 billion euros ($1.9 billion) in equity available and no debt, Wolfgruber said. Altana has approached companies as it seeks to branch out into a new area, he said. He declined to discuss potential candidates.
Wolfgruber is looking to replicate Altana’s 2005 purchase of Eckhart, which added pigments used in car paint and cosmetics. Altana has focused on higher margin specialty chemicals that can be tailormade for customers in small batches to stave off competition from BASF SE (BAS) and other major chemical companies that are moving closer toward the consumer.
Altana, based in Wesel, Germany, is investing 100 million euros a year to bolster existing operations and expand in emerging markets such as Brazil. Investment in automotive plants and car-part factories in the South American nation is fueling demand for materials, helping offset a slowdown in Europe, Wolfgruber said.
The CEO predicted growth in both earnings and sales this year, after record business in May and a rebounding U.S. market. There are no signs of destocking as customers are managing inventories better, he said.
“2012 is quite a good year, better than expected so far, but we’re expecting a more difficult second half,” Wolfgruber said. “It’s not like it was in 2008, the whole supply chain is more effective.”
The search for the fifth division continues, and the complexity of integrating some targets into a large corporation means Altana will have opportunities to pick off the right targets even amid interest in specialty products by companies such as BASF, according to Wolfgruber.
Management, including Altana’s corporate development team, sit down each year to review the mergers and acquisition situation, a process that extends over half a year.
“Some day we will be successful in this, we’re not panicking,” he said. “I’m not worried that the market will dry up and we will be left behind.”
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