Deutsche Bahn awaits final Brenntag bids

CVC Capital Partners, Blackstone Group and Bain Capital are all expected to submit final offers for the chemicals distribution business of German rail operator Deutsche Bahn.

Deutsche Bahn, the German national rail operator, has asked bidders to submit final offers for its Brenntag chemicals distribution business although bids are expected to come in at a lower price than originally anticipated.

CVC Capital Partners, Blackstone Group and Bain Capital are all expected to make bids for the business, although poor sales have seen the target price for the business fall from E1.2bn to less than E1bn, according to unnamed sources speaking to Reuters.

Brenntag supplies industrial and specialty chemicals for companies that manufacture and process chemicals. Last year the firm reported a 7.4 per cent increase in EBIT to E164.4m. The unit was acquired last year when Deutsche Bahn bought logistics group Stinnes for E2.5bn from steel trader Interfer. It is selling Brenntag to reduce company debt, currently around the E10bn mark.

Deutsche Bahn confirmed in April that it was in talks to sell the business, when Kohlberg Kravis Roberts, Carlyle Partners and BC Partners were among a group of eight potential bidders for the business.

Bain Capital is thought to be a frontrunner to acquire the Brenntag business. The firm made a number of industrial acquisitions in Europe last year, including two chemical-related businesses in France – SigmaKalon, TotalFinaElf’s decorative paint business, and three basic chemicals units from Rhodia. In October 2002, the firm teamed with Italian chemicals business Dor-Moplefan to buy Trespaphan, the polypropylene business of German chemicals company Celanese.

CVC has also been an active participant in the European chemical industries market. The firm currently controls two businesses in the sector: Verdugt, a Dutch manufacturer of specialised organic chemical additives used in the food, animal feed, pharmaceutical and chemical industry, and Acordis, a supplier of man-made fibres for industrial, textile, medical and hygiene applications.

Deutsche Bahn is hoping to complete the sale by the end of the year. Germany's Metzler Bank is advising Deutsche on the sale.