By: Greg Roumeliotis
Temasek Holdings Pte, Singapore's state-owned investment company, will invest up to $500 million in Univar Inc, valuing North America's largest chemicals distributor at around $6 billion, including debt, people familiar with the matter said.
The investment, which will be of a comparable size to Univar's upcoming initial public offering, underscores the growth prospects of the $223 billion chemical distribution market, as manufacturers outsource more of the work of delivering their product to end-users.
Temasek has agreed to take a stake of more than 20 percent in Univar, two of the people said. Temasek revealed it would invest in Univar in a filing this week with the U.S. Federal Trade Commission, but it disclosed no details.
Univar, whose IPO is expected to take place in the next few weeks, was valued at around $4.2 billion when buyout firm Clayton, Dubilier & Rice LLC (CD&R) joined CVC Capital Partners Ltd as an investor in the company in 2010.
The sources asked not to be identified because details of the agreement between Temasek and Univar are not yet public. Univar, CVC and CD&R declined to comment, while Temasek did not immediately respond to a request for comment.
Univar operates a network of 800 distribution facilities around the world, sourcing chemicals from more than 8,000 producers, such as Dow Chemical Company (DOW.N) and LyondellBasell Industries NV (LYB.N), and transferring them to more than 110,000 customer locations in more than 150 countries, including to companies such as Henkel & Co KGaA AG (HNKG_p.DE) and Kellogg Company (K.N).
The Downers Grove, Illinois-based company had net sales of $10.4 billion in 2014, up from $10.3 billion in 2013, according to a filing with the U.S. Securities and Exchange Commission. It had adjusted earnings before interest, tax, depreciation and amortization of $641.7 million in 2014, up from $598.2 million in 2013.
CVC took Univar private in 2007 for $2.1 billion. In 2010 CD&R acquired a 42.5 percent equity interest, leaving CVC with an equal stake and the remainder owned by management.
In 2012, Univar appointed former water treatment products company Ecolab Inc (ECL.N) president Erik Fyrwald as its chief executive.
Univar is only the latest chemical distributor to be taken public by private equity firms. Buyout firm BC Partners took Brenntag AG (BNRGn.DE) public in Germany in 2010, raising 747.5 million euros ($830.6 million).
(Reporting by Greg Roumeliotis in New York; Editing by Christian Plumb)
Originally Published: Reuters