April 11, 2018 / 10:49 AM / 7 months ago

Bankers line up €550m of debt for DSM unit as sale nears

LONDON, April 11 (LPC) - Bankers are preparing debt financings of around €550m to back a potential sale of Dutch speciality chemicals company DSM’s anti-infectives unit as potential buyers get ready to submit second round bids next week, banking sources said.

The unit, known as DSM Sinochem Pharmaceuticals (DSP), is a joint venture with China’s Sinochem, which acquired half of DSM’s pharma activities unit DAI in 2011.

Rothschild is advising on the sale of the DSP unit, which could fetch around €560m-€640m.

The sale has attracted interest from several private equity firms and Bain, BC Partners, CVC, Permira and Platinum are expected to hand in bids on April 20 in the second round of an auction process, the sources said.

DSM, Sinochem and DSP were not immediately available to comment. The private equity firms either declined to comment or were not immediately available to comment.

Some €550m of debt financing would give leverage of around 6.0 times DSP’s approximate €80m Ebitda, including undrawn facilities, the sources said.

The debt is expected to be in the form of senior leveraged loans and second lien loans.

DSM has been focusing on products such as vitamins and enzymes as well as fabrics and plastics used in cars, garments and construction, putting more commoditised and cyclical product lines into joint ventures with the view to eventually exiting those businesses.

The company is expected to update the market on its future strategy at a capital market day on June 20. Some investors have questioned the rationale for having a nutrition and a plastics unit under one roof, but so far DSM has not signalled that it will spin off one of the units.

By contrast, Dutch peer Akzo Nobel last month sold its €10bn specialty chemicals business to buyout firm Carlyle, to focus on coatings and paints, and delivering a commitment made in its defence against a €26bn (US$32 billion) takeover offer from US rival PPG Industries last year. (Editing by Tessa Walsh)

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