Photographer: Jock Fistick/Bloomberg

Akzo Chemicals Unit Said Valued at 10 Billion Euros in Sale

  • Carlyle, CVC among buyout firms that may weigh bids for unit
  • HSBC and Lazard said to advise Akzo on possible options

Akzo Nobel NV, which is weighing a break up after rejecting an approach by PPG Industries Inc., could sell its specialty chemicals division for about 10 billion euros ($10.6 billion), people familiar with the matter said.

The business will likely attract large private equity firms, such as Carlyle Group LP and CVC Capital Partners, as well as other companies in the industry, including Evonik Industries AG and BASF SE, the people said, asking not to be identified as the deliberations are private. Akzo said Thursday it will review options for the business, including a spinoff.

The Dutch maker of Dulux paint is working with HSBC Holdings Plc and Lazard Ltd. on strategic options after PPG’s approach, the people said. The business generates earning before interest, taxes, depreciation and amortization of about 1 billion euros and would likely command a multiple of about 10 times that figure in a sale, they said.

Chief Executive Officer Ton Buechner is working to appease investors after growth languished in the past five years compared to peers. Europe’s largest coatings company rejected PPG’s unsolicited 20.9 billion euro takeover bid, saying it undervalued the company.

Representatives for Akzo, CVC, Carlyle, BASF, Lazard and HSBC declined to comment. Evonik declined to comment on market speculation.

The specialty chemicals business is one of Akzo’s most profitable and generates about 40 percent of adjusted operating income. The unit has a strong strategic position in chlorine, which it ships via a pipeline connection to customers, working around a ban on transporting the chemical by rail.

Still, separating from the chemicals business would let Akzo’s shares trade at higher levels, similar to coatings suppliers, and may increase the value PPG would have to put on the remaining operations.

Left as it is, Akzo is at risk of failing to generate underlying earnings growth this year, and, combined with minimal cash generation, shares will struggle to build momentum in the near term, analysts from Barclays Plc said in a note last month.

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