Rockwood’s CeramTec Said to Draw Interest From Permira

Rockwood Holdings Inc.’s CeramTec unit is drawing interest from private-equity companies including Advent International and Permira Advisers, according to three people familiar with the situation.

Information on the German maker of ceramic parts for replacement knees and hips is being sent to potential buyers this week, said one of the people who asked not to be identified because the information isn’t public. CVC Capital Partners, Bain Capital and Blackstone Group have also shown an interest, the person said. Rockwood, the largest producer of lithium products, rose as much as 8.3 percent today.

CeramTec may be worth as much as $2 billion, based on estimated 2013 earnings, according to Deutsche Bank AG analyst David Begleiter. Advent, CVC, Blackstone, Permira and Bain declined to comment. Rockwood Chairman and Chief Executive Officer Seifi Ghasemi today said that he hired Lazard to explore options for CeramTec and also the additives unit.

Ghasemi is narrowing the focus of the Princeton, New Jersey-based company on lithium and surface treatments. He’s already overseeing an exit from a titanium-dioxide business called Sachtleben and last week Rockwood announced it was acquiring the 39 percent stake owned by partner Kemira Oyj to ease the divestiture.

Core Businesses

Rockwood rose as much as $4.76 to $62.26 in New York trading and was up 6.8 percent as of 10:44 a.m., valuing the company at $4.8 billion. The stock rose 26 percent in 2012 while the Bloomberg Americas Chemicals Index gained 22 percent.

The company will look at any offers it gets for the ceramics and additives businesses, Ghasemi said on a conference call today, adding that he can’t predict the outcome of the review.

Rockwood’s fourth-quarter sales gained 1.8 percent to $829 million, the company said today. That beat the average analyst estimate of $790.9 million in a Bloomberg survey. Adjusted earnings per share from continuing operations dropped 48 percent to 47 cents, in line with estimates.

“Our two core businesses, lithium and surface treatment, as well as advanced ceramics, had a satisfactory performance in the fourth quarter,” Ghasemi said in the statement.

CeramTec, which supplies ceramics to the health-care, electronics and auto industries and is based in Plochingen, Germany, posted full-year earnings before interest, tax, depreciation and amortization of $174.8 million on sales of $546.7 million, Rockwood said today. The additives unit posted Ebitda of $124 million on sales of $731.5 million.

Health-Care Growth

In a sale, CeramTec may fetch about 10 times Ebitda, one of the people familiar with the situation said. The ceramics business could be worth $2 billion based on projected earnings for this year, Deutsche Bank said in a Jan. 22 note.

Based on the average multiple of 6.2 times Ebitda paid in ceramic products deals in North America and western Europe in the last five years, CeramTec would be valued at about $1 billion, according to data compiled by Bloomberg.

Chris Shaw, a New York-based analyst at Monness Crespi Hardt & Co., this month said CeramTec could fetch more than the average ceramic company because of its higher profitability and its growth prospects.

CeramTec, founded in 1903 as a porcelain factory, supplies ceramics to the electronics and auto industries, with more than 3,600 employees worldwide. The company got its current name after Dynamit Nobel’s Cerasiv unit took over Hoechst CeramTec. Rockwood agreed to buy the business in 2004.

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