Ashland Water-Chemicals Unit Said to Get Three Bids by DeadlineJodi Xu and Andrew Noel
Ashland Inc. received three bids for its water-chemicals unit as of the Feb. 10 deadline, including a joint proposal from Blackstone Group LP and Danaher Corp. valued at almost $2 billion, people with knowledge of the matter said.
Clayton Dubilier & Rice LLC and Rhone Group LLC also made offers for Ashland’s specialty-chemicals company of less than $2 billion, said one of the people, who asked not to be named because the process is private. The company plans to select a winner in the next few weeks, the person said.
Ashland said in November that it would exit the water-chemicals business as part of an overhaul that includes selling its elastomers unit, which supplies synthetic rubber to tire makers. The Covington, Kentucky-based company is focusing on expanding in additives used in cosmetics and pharmaceuticals after its $3.2 billion purchase of International Specialty Products Inc. in 2011. The decision came six months after activist investor Jana Partners LLC disclosed a stake in the chemicals maker.
Citigroup Inc. is advising Ashland on options for Water Technologies, Ashland said in July.
If the Blackstone-Danaher group wins the deal, the companies plan to break up the asset, according to another person familiar with the situation. Danaher would keep the operations supplying treatments for municipal water and industrial waste, and Blackstone would acquire the pulp- and paper-chemical side of the business, the person said.
Danaher’s water business has outperformed management hopes, Chief Executive Officer Larry Culp said on a Jan. 15 conference call. The Washington D.C.-based company has broadened its reach in the industry beyond disinfecting municipal and industrial supplies by targeting niche markets such as treating the ballast water used to balance ships.
CD&R, based in New York, is one of the industry’s oldest private-equity firms and specializes in buying unwanted or underperforming divisions of larger corpoations. As of December, the firm was nearing the $5 billion goal on its ninth investment pool, a person familiar with the situation said at the time. Rhone Capital, also based in New York, specializes in mid-market leveraged buyouts, recapitalizations and partnership financings, according to data compiled by Bloomberg.
Potential buyers have asked banks to line up about $1.3 billion in debt for the acquisition, which would leverage the business to about 6.5 times earnings before interest, taxes, depreciation and amortization, according to one of the people familiar with the situation.
A spokesman for Ashland declined to comment on the sale of its water-chemicals unit. Representatives for Danaher, Blackstone, Citigroup, CD&R and Rhone also declined to comment.