Kemira taps Stifel for oil and gas unit carve-out – sources

Breaking News 21 March

Kemira taps Stifel for oil and gas unit carve-out – sources

Finnish chemicals company Kemira [HEL:KEMIRA] has engaged advisory firm Stifel to explore a sale of its oil and gas division, three sources familiar with the matter said.

A formal auction is expected to kick off in Q2, with the asset set to be marketed off FY23 EBITDA north of EUR 50m, the sources said. The unit is likely to fetch a 6-7x EBITDA multiple, one of them added.

The oil and gas division sits within Kemira’s Industry and Water segment, which booked 2022 revenues of EUR 1.5bn, up from EUR 1.1bn in 2021. Revenue in the oil and gas business increased by 54% to EUR 377.5m, mainly due to higher sales prices, particularly in shale. In addition, sales volumes increased, according to its annual report.

The asset, which comprises two facilities in the US and one Europe-based plant, is likely to appeal to strategics and financial sponsors, particularly in the US, where most of its operations are based, one of the sources said. US specialty chemicals players Platinum Equity-owned Solenis and Innospec [NASDAQ:IOSP] are both logical contenders, the source added.

Innospec submitted a GBP 1bn-plus conditional takeover offer for UK-based speciality chemicals firm Elementis [LON:ELM] in April 2021, which the latter declined, claiming the bid significantly undervalued the company.

German buyout firm Aurelius Group [ETR:AR4] is among mid-to-large-cap sponsors that could also register interest, two of the sources agreed. Aurelius is vying against US sponsor One Equity Partners to acquire German chemicals company Solvay’s oilfield business, as reported by this news service earlier this month.

Kemira is likely to be offloading the asset in a bid to streamline its portfolio to meet ESG expectations, one of the sources said. “A significant share of our investors practices ESG Investing. These ESG investor signatories represent 20% of the ownership of Kemira shares (restated figure 21% in 2021),” the company stated in its most recent annual report.

The oil and gas business provides global oilfield chemical solutions used in processes including production, drilling and oil sands. Kemira also manufactures chemical solutions for the pulp and paper and mining industries.

Kemira declined to comment. Stifel did not respond to a request for comment.

by Georgina Barnard and Kezia Joseph in London

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