Schroder emerges as main suitor for Henkel
The owner of Together for Leather, the private equity investor Schroder Ventures, last week emerged as the front runner in talks to buy Cognis, the specialty chemicals unit of Henkel, the German household products group.
Industry insiders say Schroder, which is being backed by Goldman Sachs, would pay between E2.3 billion and E2.5 billion ($1.95 billion to $2.1 billion) for the Dusseldorf-based business, which was the only Henkel division to produce results in line with first quarter expectations, despite a slowdown in its US operations.
Cognis products have a strong following in the tanning sector where they are used in the optimisation of a range of processes. The company is unusual among large speciality chemicals businesses in that it makes extensive use of natural raw materials – especially oils and fats. The disposal is seen as being consistent with Henkel’s policy of focusing on its core consumer brands that include Persil washing powder in Germany, Schwarzkopf hair products and Svit home dry cleaning products.
It also signals the end of Henkel’s conglomerate structure and the willingness of German companies – even strong family-run businesses – to restructure in line with shifting market conditions. Specialty chemicals companies such as TFL and Cognis have attracted particular private equity interest in recent years because they are less cyclic than bulk chemicals and carry higher margins.
Based in Dusseldorf, Cognis has a workforce of 10,000 worldwide and operations in almost 50 countries.
