Apax Partners to Buy Chemical Distributor Azelis From 3i

Apax Partners agreed to buy a majority stake in Azelis from 3i Group Plc to help the European chemical-distribution company expand globally.

The deal is expected to close in the second quarter, London-based 3i said in a statement Wednesday. Financial terms weren’t disclosed. Azelis generated 944 million euros ($1.1 billion) in sales and 38 million euros in earnings before interest, taxes, depreciation and amortization in 2013, according to its website.

Apax Partners had been “proactively targeting” the specialty-chemical distribution industry and was keeping an eye on Azelis over the last couple of years, partner Frank Ehmer said in the statement. The buyout firm, also based in London, is entering the industry after Azelis competitor IMCD Group NV sold shares to the public last year and as rival Univar Inc. plans to follow suit.

“Azelis has undergone a significant transformation,” Robert Van Goethem, a partner at 3i, said in the statement. “Despite the challenging European economic environment in recent years, the company has successfully expanded into new markets and in its core market segments.”

Azelis, based in Antwerp, Belgium, would provide Apax with a foothold to expand globally as large chemical-distribution companies such as Brenntag AG swallow up smaller ones in fast-growing emerging markets.

Chief Executive Officer Hans-Joachim Mueller, a former executive at Clariant AG and BASF SE, is expanding Azelis into emerging markets such as Morocco and Indonesia, opening laboratories to offer clients from paintmakers to cosmetic companies more choice on formulations.

“BASF was a great training ground, they taught me the need to get a structure in place and have a strategy,” Mueller said in an interview. “You have to have a game plan.”

Azelis Brand

Over its 7 1/2 years of ownership, 3i sought to give a single identity to a disparate group of operations supplying chemicals and additives to a range of manufacturers involved in coatings, cosmetics, pharmaceuticals and animal health. Azelis also opened offices in China, Japan and southeast Asia, matching moves by Muelheim an der Ruhr, Germany-based Brenntag and other competitors to expand globally.

While lowering sales and administrative costs by about 30 percent, Azelis has added to its sales force and technicians working on product development, the CEO said in the interview.

“There was a period of time when we really didn’t grow, but that’s all moved by, and everything is looking upward,” Mueller said. “You have to be really lean and mean in this industry. We have spent significantly on the sales and lab sides.”

Impromptu Sale

Azelis raised 30 million euros in a capital increase two years ago after abandoning a sale. The deal with Apax was struck after Azelis began plans for debt refinancing and potential buyers came forward.

CEO Mueller will stay on to lead Azelis, with the challenge of further integrating teams and developing product portfolios to get more cross-border contracts.

Mueller said that next week he will travel to Indonesia, where Azelis will open an operation this year. It’s part of a global expansion plan that also includes Morocco so that Azelis can offer cross-border services to large multinational companies.

UBS AG advised Apax financially, while JPMorgan Chase & Co. will provide funding, and Simpson Thacher & Bartlett and Ashurst were legal advisers. Ernst & Young provided accounting advice. Greenhill advised 3i, with Clifford Chance providing legal advice.

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