Imperial said to explore sale of German agrochemical-ingredient business

Imperial Holdings Ltd. is exploring a potential sale of an agrochemical-ingredient business based in Germany that may be worth about 150 million euros ($163 million), according to people with knowledge of the matter.

Schirm GmbH, which manufactures products for chemical makers including BASF SE, Dow Chemical Co. and Syngenta AG, generates about 113 million euros in annual sales, with a 13 percent earnings before interest, taxes, depreciation and amortization margin, said the people, who asked not to be identified because the information haven’t been made public. No decision has been taken, and Johannesburg-based Imperial could retain the business, which is likely to attract interest from both private equity firms and companies.

Imperial shares rose 0.7 percent to 163.46 rand as of 3:16 p.m. in April 26th in Johannesburg, valuing the company at 33 billion rand ($2.5 billion).

Under Chief Executive Officer Mark Lamberti, Imperial has been selling assets to simplify the company into two distinct units specializing in an international logistics operation and a vehicles business in sub-Saharan Africa. On Monday, it completed the sale of an insurance company for 1.8 billion rand ($137 million) after a lengthy regulatory process, and the company has also been offloading real estate. Imperial took control of Schirm via its purchase of German logistics company Lehnkering in 2011.

“Imperial continues to actively review its portfolio of assets as to focus on those that are strategically aligned and core to our business while disposing of businesses that are under performing or non core,” spokesperson Esha Mansingh said in emailed comments. “The market is kept informed if and when such transactions are finalized.”

While the global agrochemical industry is still in the midst of a downturn thanks to lower crop prices, demand for assets and acquisition targets remains high as companies look to broaden their portfolio in preparation for an expected upturn in 2018. Schirm has its headquarters and five plants in Germany, with an additional site serving customers in the U.S. Unlike other so-called fine chemical companies, its interests range from manufacturing ingredients to packaging services.

Schirm’s competitors include CABB, owned by buyout firm Permira, Lanxess AG and Lonza AG. The latter’s $5.5 billion purchase of pill-casing supplier Capsugel highlighted how bringing packaging and custom manufacturing of chemicals and pharmaceuticals is a growing trend, as clients seek a one-stop shop to free up resources for researching and developing new ingredients.

Imperial’s plans are at an early stage, and Rothschild & Co. is advising on possible options, the people said. A decision could be made toward year-end, they said.