In an attempt to concentrate on the more profitable business units, Clariant AG has decided to sell three of its businesses to SK Capital Partners. The deal has been finalized for a sum of $550 million. Incidentally, Clariant AG, the renowned Switzerland based Chemical maker has taken a route to divest its assets.
The deal price is 6.3 times of the estimated earnings of Clariant in 2012. Clariant is thinking of selling 5 of its business units by end of 2013 and this sale is part of this plan. This deal is expected to be completed by June, 2013. With this news, the stock prices of Clariant have risen to the highest level in 9 months. It has increased by 3.1% and is at 12.21 francs per share currently. This marks its highest value since 5th April. Thanks to the company’s plan to sell weaker assets, Clariant shares have increased by 36% on a whole in 2012.
According to Martin Schreiber, the Analyst of Zuercher Kantonalbank, it is important to note that Clariant has been able to sell some of its business units pretty fast and hence, investors are positive that the company will do its best to sell the other less profiting business units in quick time as well. This led to the share growth.
Incidentally, the Chief Executive Officer of Clariant, Hariolf Kottmann is pretty excited about this sale and added that the procedure started way before many people predicted. He added that in an attempt to reposition Clariant assets, further acquisitions can be made, however, a final decision is yet to be taken. In 2011, Clariant acquired Sued-Chemie, a German catalyst maker for a price of $2.7 billion. It is expected that Clariant will conduct an auction anytime in the 1st half of 2013 to sell some of its further units and go full-fledged on its way to exit from the leather chemicals industry.
Many economists predict the deal is less than expectations as the three units sold are expected to report an annual profit of 1.2 billion francs in 2012. They believe that Clariant went ahead with a book value.
Numerous companies such as Citigroup, Ernst & Young and Homburger AG gave Clariant advice on the sale, whereas, SK Capital was helped by Lewis & Bockius, Jefferies & Company, Morgan and Baer & Karrer AG.