Perstorp Owner Nears Deal to Sell Plastics Chemical Unit

(Bloomberg) -- PAI Partners SAS is in advanced talks with parties including private equity firm Cinven and the U.S. additives company Ingevity Corp. over the sale of a unit belonging to its Perstorp chemical company, according to people with knowledge of the situation.

Final bids have been submitted and a sale could raise as much as 600 million euros ($684 million), said the people, who asked not to be identified because the matter is private. While Cinven and Ingevity are on a short list of potential buyers, no decision has been made and PAI may still decide to keep the business, they said.

A representative for Paris-based PAI declined to comment. Representatives for London-based Cinven and Ingevity, based in North Charleston, South Carolina, also declined to comment.

PAI, which acquired Perstorp in 2005, is timing the auction with a surge in earnings from a key product, caprolactone, as well as a steep increase in the valuation of chemical assets.

The U.K.-based business, known as Capa, makes caprolactone and is considered Sweden-based Perstorp’s crown jewel. The additive is used in biodegradable packaging and plastics, and is expected to generate about 60 million euros in earnings before interest, taxes, depreciation and amortization this year, people familiar have said.

As well as tapping demand for biodegradable bags and additives for coatings, Perstorp has expanded its caprolactone business into medical devices and additives for 3D-printing. Perstorp became a leading supplier of the chemical, alongside BASF SE and Japan’s Daicel Corp., after buying the business from Solvay SA in 2008.

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