Bain, Cinven Said to Team Up for $3.9 Billion Lonza Chemical Arm

Bain Capital and Cinven are joining forces to bid for Lonza Group AG’s specialty ingredients unit, according to people familiar with the matter, which could result in one of the largest European chemicals deals of the year.

The private equity firms have teamed up in the race for Lonza’s LSI business, which could fetch around 3.5 billion Swiss francs ($3.9 billion), the people said, asking not to be identified discussing confidential information.

They could face strong competition from rival buyout firms, with the unit also attracting Advent International, Blackstone Group, Carlyle Group, EQT AB, KKR & Co., Lone Star and Partners Group, as well as strategic interest from German chemicals group Lanxess AG, the people said. More firms could seek to partner up ahead of making a bid for the asset, according to the people.

A deal would be one of the largest involving a European chemicals company this year, according to data compiled by Bloomberg, potentially surpassing K+S AG’s sale of its Morton Salt unit to Kissner Group for $3.2 billion.

Basel, Switzerland-based Lonza decided in July to sell the LSI unit as part of a move toward becoming a pure-play pharmaceuticals and biotech company. LSI manufactures chemicals for use in everything from paints to crop protection. Its microbial control solutions are also used in professional cleaning products and sanitizers, demand for which is expected to remain high during the coronavirus pandemic.

Lonza could send out marketing materials on the LSI unit as soon as the coming weeks, the people said. A representative for Lonza said the group had begun preliminary talks with potential buyers. Representatives for the interested parties declined to comment.

LSI’s revenue fell 4.7% to 819 million Swiss francs in the first half of the year, according to its latest financial report. Core earnings before interest, taxes, depreciation, and amortization slipped 1.2% to 161 million francs.

Source: Bloomberg