Rockwood Holdings Inc. (ROC:US), the largest producer of lithium products, agreed to sell German ceramics unit CeramTec to Cinven Ltd. for 1.49 billion euros ($2 billion) to focus on its metal business and return cash (ROC:US) to shareholders.
Cinven, a buyout firm dedicated to investing in Europe, expects to close the acquisition of CeramTec in the third quarter, subject to European Union competition clearance, Rockwood said yesterday in a statement.
CeramTec makes ceramic parts for replacement knees and hips as well as components for the electronic and auto industries. Rockwood Chairman and Chief Executive Officer Seifi Ghasemi is selling the business as he narrows the focus of the company. He said yesterday Princeton, New Jersey-based Rockwood will use the proceeds to support its “balanced approach” to debt reduction (ROC:US), return of capital to shareholders and investment in other businesses.
“Successful execution of this transaction at an attractive multiple will bring Rockwood one significant step closer to our strategic objective and commitment to become a more focused specialty chemical company,” he said in the statement.
Cinven, with offices in Guernsey, London, Frankfurt, Paris, Milan, Luxembourg and Hong Kong, won the bid for CeramTec over competitors, which included Permira Advisers LLP and Blackstone Group LP (BX:US), according to three people familiar with the matter in April. The firm, which raised 5.3 billion euros this month, invests in companies with needs of more than 100 million euros in equity.
“We are particularly impressed with CeramTec’s ability to consistently launch high value, innovative products through economic cycles,” Bruno Schick, a partner and co-director of Cinven’s German unit, said in a separate statement. “We are keen to support the company’s growth outside its core European markets, specifically in North America and Asia, both organically and through acquisitions.”
CeramTec, founded in 1903 as a porcelain factory, has more than 3,600 employees worldwide, according to its website. It had sales of 425 million euros last year, Cinven said. The company, based in Plochingen, Germany, got its current name after Dynamit Nobel’s Cerasiv unit took over Hoechst CeramTec. Rockwood agreed to buy the business in 2004.
“Cinven’s investment will enable us to capitalize on the opportunities in our existing markets as well as further expand the business internationally.” Ulf Zimmermann, CEO of CeramTec, said in the second statement.
Rockwood rose 0.9 percent to $67.18 in New York.
Lazard Ltd. (LAZ:US) acted as Rockwood’s financial adviser and Willkie Farr & Gallagher LLP provided legal advice.
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