Wendel in talks with Clariant and BASF for Stahl IPO project
25 JAN 2018
- Stahl could list in Amsterdam in 2H18 at the earliest
- Comps universe includes Croda, Lanxess, Covestro, Axalta and DSM
- Average points to 12.64x EV/EBITDA benchmark
- Comps universe includes Croda, Lanxess, Covestro, Axalta and DSM
- Average points to 12.64x EV/EBITDA benchmark
French investment company Wendel [EPA:MF] is in talks with minority shareholders Clariant [VTX:CLN] and BASF[ETR:BAS] for the potential listing of their Dutch chemical company Stahl, a fund manager and two bankers briefed on the situation said.
The Wendel-controlled company is expected to list in Amsterdam as soon as this year, they agreed.
Wendel holds a 63% stake in Stahl while Clariant and BASF hold respectively 19% and 16%. Last week, a newswire report citing unnamed sources familiar with the matter said Wendel was considering selling its stake, possibly through an IPO.
A Wendel spokesperson declined to comment on market rumours. Stahl declined to comment.
At the earliest, Stahl would list in 2H18 but could also wait until 1H19, the first banker briefed on the situation said.
A listing in 1H18 would be far too early, especially after the recent divestment of BASF’s leather chemicals business to Stahl in October 2017, a person briefed on the situation noted, adding other divestment options for Wendel should not be ruled out.
Wendel holds a 63% stake in Stahl while Clariant and BASF hold respectively 19% and 16%. Last week, a newswire report citing unnamed sources familiar with the matter said Wendel was considering selling its stake, possibly through an IPO.
A Wendel spokesperson declined to comment on market rumours. Stahl declined to comment.
At the earliest, Stahl would list in 2H18 but could also wait until 1H19, the first banker briefed on the situation said.
A listing in 1H18 would be far too early, especially after the recent divestment of BASF’s leather chemicals business to Stahl in October 2017, a person briefed on the situation noted, adding other divestment options for Wendel should not be ruled out.
In exchange for its leather chemicals business sale, BASF received a 16% stake in Stahl and a cash consideration of circa EUR 150m, according to a press release.
Following the completion of the BASF's leather chemicals deal, Rothschild was mandated by Wendel to review Stahl's growth strategy, including a listing, the person briefed on the situation continued.
Wendel had previously attempted a sale of Stahl. In 2015, it mandated BoA Merrill Lynch for a potential divestment of its then 72% stake at a valuation of around EUR 1bn, according to previous news reports.
Following the completion of the BASF's leather chemicals deal, Rothschild was mandated by Wendel to review Stahl's growth strategy, including a listing, the person briefed on the situation continued.
Wendel had previously attempted a sale of Stahl. In 2015, it mandated BoA Merrill Lynch for a potential divestment of its then 72% stake at a valuation of around EUR 1bn, according to previous news reports.
Given the current trading multiples of its listed peers, it makes sense for Wendel to float instead of selling the asset, the second banker briefed and the fund manager suggested.
Comps universe and valuation
The main valuation peers for Stahl include UK-based industrial chemicals specialist Croda [LON:CRDA] and German supplier of high-tech polymers Covestro [1COV:DE], the fund manager and the two bankers agreed.
German chemicals company Lanxess [LXSG.DE], and to a lesser extent, US-based paint company Axalta [NYSE: AXTA] could be added to the list of comparables for an IPO valuation, the first banker briefed noted.
Dutch health, nutrition and materials company DSM [AMS:DSM] was also mentioned by the fund manager as a good benchmark for Stahl.
The comps universe including all peers trades in a range of 6.95x (Covestro) to 17.18x (Croda), averaging 12.64x EV/EBITDA on a trailing 12-month basis, according to Dealreporter analytics.
Comps universe and valuation
The main valuation peers for Stahl include UK-based industrial chemicals specialist Croda [LON:CRDA] and German supplier of high-tech polymers Covestro [1COV:DE], the fund manager and the two bankers agreed.
German chemicals company Lanxess [LXSG.DE], and to a lesser extent, US-based paint company Axalta [NYSE: AXTA] could be added to the list of comparables for an IPO valuation, the first banker briefed noted.
Dutch health, nutrition and materials company DSM [AMS:DSM] was also mentioned by the fund manager as a good benchmark for Stahl.
The comps universe including all peers trades in a range of 6.95x (Covestro) to 17.18x (Croda), averaging 12.64x EV/EBITDA on a trailing 12-month basis, according to Dealreporter analytics.
Applying the average peer multiple to Stahl’s TTM EBITDA of EUR 166m suggests an enterprise value (EV) of about EUR 2.1bn, with an equity value of approximately EUR 1.65bn, taking into account Stahl’s net debt of EUR 453.5m, Dealreporter analytics show.
Following the acquisition of BASF's assets, Stahl predicted combined sales of EUR 870m-EUR 890m and EBITDA of EUR 200m-EUR 210m (estimated pro forma 2017), the company said in the deal announcement. Based on the estimated EUR 200m EBITDA figure and the sae average multiple, its enterprise value could come to EUR 2.53bn.
Sector peers have been performing well, with all except Axalta demonstrating six month EBITDA growth YoY, from 9.6% for Lanxess to 16.5% for Croda, excluding outlier Covestro which saw EBITDA shoot up 57.4%, Dealreporter analyticsshow.
Stahl could expect to fetch a multiple between 10x-12x EBITDA but its actual valuation remains a question mark, the first banker suggested, highlighting the 2015 failed sale attempt. Previous reports at the time put the company's potential valuation at 8-10x EBITDA.
Wendel acquired Stahl in 2006 for approximately EUR 520m. Stahl produces leather chemicals, performance coatings and polymers.
Stahl could expect to fetch a multiple between 10x-12x EBITDA but its actual valuation remains a question mark, the first banker suggested, highlighting the 2015 failed sale attempt. Previous reports at the time put the company's potential valuation at 8-10x EBITDA.
Wendel acquired Stahl in 2006 for approximately EUR 520m. Stahl produces leather chemicals, performance coatings and polymers.
Rothschild, Clariant and BASF did not reply to requests for comment.