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BASF’s $3 Billion Unit Sale Loses Steam as Buyout Firms Exit

Aaron Kirchfeld, Myriam Balezou and Sarah Syed

(Bloomberg) -- Several private equity suitors are considering walking away from BASF SE’s sale of its construction-chemicals business as the auction becomes increasingly focused on corporate buyers, people familiar with the matter said.

Advent International’s interest in the business is cooling as the Sept. 9 deadline for the next round of bids approaches, according to the people. Bain Capital and Blackstone Group Inc. are already out of the running for the asset, the people said, asking not to be identified because the information is private.

The private equity firms face stiff competition from industrial bidders including cement giant LafargeHolcim Ltd. and Standard Industries Inc., which are still in the process, the people said. Several buyout firms have been frustrated by BASF’s reluctance to provide detailed information on the segment’s earnings for this year, information they need to secure financing, the people said.

Corporate bidders with existing knowledge of the industry have had an easier time valuing the business, the people said. The unit could fetch more than 3 billion euros ($3.4 billion), Bloomberg News reported last month.

BASF rose 1% to 56.77 euros at 10:20 a.m. in Frankfurt trading. The stock has declined 6% this year, giving the company a market value of about 52.1 billion euros.

Master Builders

Some suitors were also concerned that a full carveout of the business isn’t expected to be completed until the summer of 2020 as the company deals with a complicated separation that includes dividing the unit’s technology systems from the rest of BASF, the people said.

BASF’s construction chemicals unit supplies mortars and cement additives, as well as waterproofing materials and sealants under the legacy Master Builders brand.

Lone Star Funds, one of the few remaining private equity bidders, is still in the process, the people said. Cinven Ltd., which owns the potentially complementary business Chryso, continues to participate for now, they said. KKR & Co. has also been considering whether to bid in the next round, the people said.

Solo Bid

Standard Industries, the building materials company that had earlier partnered with Blackstone, is now pursuing a bid on its own, the people said. No final decisions have been made, and there’s no certainty they will proceed with offers, the people said.

Representatives for Advent, Bain, BASF, Blackstone, Cinven, KKR, Lone Star and Standard Industries declined to comment.

“It is part of management duty that the company looks at potential acquisition targets to complement its strategy of becoming the global leader in building materials,” LafargeHolcim said in an emailed statement. “Strict financial discipline applies with all potential acquisition targets.”

The company declined to comment on any potential interest in the BASF unit.

(Updates with BASF share price in fifth paragraph)

--With assistance from Andrew Noël, Jan Dahinten, Dinesh Nair, Kiel Porter and Michael Hytha.

To contact the reporters on this story: Aaron Kirchfeld in London at akirchfeld@bloomberg.net;Myriam Balezou in London at mbalezou@bloomberg.net;Sarah Syed in London at ssyed35@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, ;Liana Baker at lbaker75@bloomberg.net, ;Dinesh Nair at dnair5@bloomberg.net, Ben Scent, Amy Thomson

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