Heubach, SK Capital Partners carve out Clariant Pigments

The valuation equates to an entry multiple of 10.7-11.4x the company's EBITDA for the year to April 2021. The deal includes an earn-out of CHF 50m.

Clariant is to reinvest in the business for a 20% stake.

BofA Securities and Citi have provided financing to back the deal, according to a statement. The deal is expected to close in H1 2022.

Clariant first announced in September 2018 that it intended to divest its pigments division by 2020.

Mergermarket first reported in September 2019 that Heubach and SK Capital Partners intended to combine forces to acquire the business in an attempt to pre-empt any potential auction process. At the time, the company posted EBITDA of CHF 140m, with a valuation of 10x expected.

Reuters reported in January 2020 that Clariant intended to launch a sale process for its pigment unit in February 2020. Although the process was postponed in April 2020 due to the coronavirus pandemic, Mergermarket reported in July that year that the sale was to be launched again in September. Bids of around 8x the company's CHF 140m EBITDA were expected, the report noted, adding that sponsors including Advent International, SK Capital, Triton and Rhône Group could form bidding consortiums as part of the process.

In January 2021, Mergermarket reported that bidders including SK Capital, Heubach, Triton and HIG's Dominion Colour Corporation were involved with the process. The company was marketed based on EBITDA of CHF 75m, with valuations of 7-8x EBITDA expected. The report said that a lack of competition in the process, plus the company's exposure to the automotive sector, had caused its valuation to drop.

US-headquartered SK Capital has previously invested in the European chemicals sector, acquiring shares valued at around £42.5m in UK-based Venator Materials for a stake of almost 40% in August 2020.

Company
Chemicals company Clariant is headquartered in Muttenz in Switzerland. The company was formed in 1995 via an IPO spin-out from Sandoz. Clariant's pigments unit produces dyes for use in the automotive and construction industries. The company employs 1,900 people and posted 2020 revenues of CHF 850m.

People
SK Capital Partners – Aaron Davenport (managing director).
Heubach Group – John Heubach (CEO).
Clariant – Conrad Keijzer (CEO).

Advisers
Equity – Piper Sandler & Co (corporate finance); BofA Securities (corporate finance); Citi (corporate finance); Lenz & Staehelin (legal); Kirkland & Ellis (legal); Milbank (legal).
Vendor – Homburger (legal); Deutsche Bank (corporate finance).

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• Buyouts
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