Petronas said to enter fray for US$4b Lonza chemicals unit

[KUALA LUMPUR] Malaysian state oil producer Petroliam Nasional is among suitors vying for a chemicals business being sold by Lonza Group, people with knowledge of the situation said.

Petronas is working with an adviser as it considers a second-round bid for the Lonza Specialty Ingredients business, according to the people. Switzerland-based Lonza has asked for offers by early February, the people said, asking not to be identified because the information is private.

German chemical producer Lanxess and a crop of top private equity firms have also been shortlisted for the next round of bidding for the business, which could fetch around US$4 billion, Bloomberg News has reported.

A spokesperson for Lonza said the company is in discussions with potential buyers of the unit, declining to comment further. A representative for Petronas couldn't immediately comment.

Lonza, a maker of drug ingredients, is timing the sale of the biocide business with a surge in demand for hygiene chemicals. Use of antibacterial hand gels and disinfectants is expected to remain high beyond the peak of the coronavirus pandemic due to a deep-seated change in consumer habits.

Petronas already produces chemical staples including ammonia and methanol, a colourless liquid used to help make antibacterial agents and disinfectants. Shares of listed unit Petronas Chemicals Group have fallen 1.1 per cent in Kuala Lumpur trading this year, giving the company a market value of about RM58.8 billion (S$19.3 billion).

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The Malaysian group joins other energy companies seeking to diversify by building out their chemical operations as they grapple with the long-term switch away from oil and gas. State-owned Saudi Aramco last year took over Saudi Basic Industries, the kingdom's flagship chemical producer.

Carlyle Group and a separate consortium of Bain Capital and Cinven have also been preparing second-round bids for Lonza Special Ingredients, Bloomberg News has reported.

Lonza chairman Albert Baehny is seeking a trusted partner to buy the business, which is located right in the heart of the Visp, Switzerland site where the company makes critical ingredients for drugs. Lonza is helping produce Moderna's Covid-19 vaccine at its facilities in Europe and the US.

BLOOMBERG