Rockwood places Novasep on the block

16 October 2006 00:00  [Source: ICB Americas]

ROCKWOOD HOLDINGS has put fine chemicals and pharma services company Groupe Novasep on the selling block, according to reliable sources in the financial community.

"Rockwood has hired JPMorgan and Lazard to sell Novasep," said one source.

Likely bidders include Indian fine chemical firms and private equity. "You don't have to look far to see who's buying all these assets - it's mostly the Indian firms," said one observer. "But these are tough businesses to sell and get financing on because of unsteady cash flow."

This year, India-based Dishman bought Carbogen and Amcis from Solutia for $74.5m, and Shasun acquired Rhodia's fine chemicals business for an undisclosed sum, while equity firm TowerBrook Capital picked up Clariant's fine chemicals business for $86m.

With revenues of about €280m ($352m), Novasep would considerably enlarge strategic buyers ambitious to gain mass quickly.

However, Novasep's greatest attraction is its technological sophistication, noted Jan Ramakers, director of Jan Ramakers Fine Chemical Consulting Group. Capabilities include high-energy chemistry, high-potency active pharmaceutical ingredients (Novasep is a major paclitaxel producer), and separations, including simulated moving-bed chromatography. "I'm sure it will attract loads of potentials," he said.

Sale is not the only option being pursued, according to another source. "Rockwood is more likely to do an IPO, as they are doing a dual-track process," he said. "I think that is more likely given the price the seller has been told that it could achieve in an IPO versus a sale."

Rockwood would seek to float Groupe Novasep on the Paris bourse rather than in the US, the source added.

The March sale of Pratteln, Switzerland-based Rohner to Arques Industries may have been a preparatory move. One of the three fine chemicals companies that Rockwood merged with purification specialist Groupe Novasep in January 2005, Rohner's historical specialty is graphics chemicals and dyestuffs. Although a major investment in 2002 added cGMP capacity to serve the pharmaceutical industry, Rohner has been hit hard by the loss of its traditional markets to Asian competition.

In the second quarter, Groupe Novasep posted an 11% decline in sales to $84.3m, primarily on the sale of Rohner. However, adjusted EBITDA jumped 55% to $19.8m on the disposal of Rohner, as well as higher sales of Tamiflu applications.


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