Rockwood Holdings Inc. (ROC:US), the world’s largest producer of lithium products, is considering the sale of a ceramic-materials unit generating $550 million in annual revenue, according to three people with knowledge of the matter.
The U.S. specialty chemical maker is working with Lazard Ltd. (LAZ:US) to explore options for Plochingen, Germany-based CeramTec, said the people, who asked not to be identified as the plan is private. The process is in the early stages, they said. Rockwood rose 7.9 percent in New York trading, the biggest gain since April last year.
CeramTec may be valued at about $1 billion based on the average multiple paid in ceramic products deals in North America and western Europe in the last five years.
Rockwood Chairman and Chief Executive Officer Seifi Ghasemi is moving the Princeton, New Jersey-based company away from commodities to lithium battery materials and surface treatments. He’s already overseeing an exit from a titanium-dioxide venture with Kemira Oyj. Tim McKenna, a spokesman for Rockwood, declined to comment on a potential sale of CeramTec.
Chris Shaw, a New York-based analyst at Monness Crespi Hardt & Co., said CeramTec may be even worth more than $1 billion.
“It could actually attract pretty attractive multiple of as much as 10 times” earnings before interest, taxes, depreciation and amortization, he said by phone.
“If it could get that kind of valuation, it would be a positive” for Rockwood, said Shaw, who rates the company a buy. “As a whole, Rockwood trades at a lower multiple than that.”
CeramTec last year had an Ebitda of about $170 million on sales of about $550 million. The average multiple paid in ceramic material deals in North America and western Europe in the last five years was 6.2 times Ebitda, according to data compiled by Bloomberg.
Rockwood closed at $59.43 in New York, valuing the company at $4.6 billion. The stock rose 26 percent in 2012 while the Bloomberg Americas Chemicals Index gained 22 percent.
CeramTec, founded in 1903 with a porcelain factory, supplies ceramics to the electronics and auto industries, with more than 3,600 employees worldwide today. The company got its current name after Dynamit Nobel’s Cerasiv unit took over Hoechst CeramTec. Rockwood agreed to buy the business in 2004.
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