10 June 2010 16:08 [Source: ICIS news]
LONDON (ICIS news)--BASF is close to completing a deal to acquire additives producer Cognis, with the possibility that the sale could be announced as early as next week, sources familiar with the planned transaction said on Thursday.
News reports on Wednesday said the German chemicals major BASF had in principle agreed the acquisition, and were nearing the end of discussions with Goldman Sachs and Permira, which advise a group of private equity firms that own Cognis.
BASF would be expected to pay close to €3bn ($3.6bn) including debt for Cognis, based on ICIS calculations.
On May 26, when Cognis released its first quarter earnings for 2010, its CFO Marco Panichi indicated a fair value for the company would be in the range of 6 to 10 times earnings before interest, taxes, depreciation and amortisation (EBITDA), including net debt.
Panichi said he would be relatively comfortable with a valuation placed in that range. On a price-earnings multiple of eight, Cognis would be worth about €2.9bn based on the adjusted EBITDA of €364m the company reported for the full year of 2009.
BASF, Cognis, Goldman Sachs and Permira all said they would not comment on rumours or speculation.
In May, following news reports that BASF had made a bid for the group, Cognis had not ruled out the possibility of a takeover as it looked at strategic options for the future.
If the acquisition of Cognis went through, it would be BASF’s largest deal since it bought specialty chemicals major Ciba for around €3.9bn in April last year.
($1 = €0.83)
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