Carlyle buys Total’s Atotech business

Carlyle Group has beaten rival private equity groups to reach a $3.2bn deal with Total for the French company’s Atotech chemicals business.

The sale takes the energy group closer to its target for $10bn of disposals by the end of next year. Total and its rivals are all seeking to shed non-core assets in response to continued weakness in oil and gas prices.

Carlyle faced competition from CVC Capital Partners and a consortium of BC Partners and Cinven, according to people involved in the process.

Asset disposals have become an important part of efforts by Total and other oil majors to shore up their balance sheets and defend their dividends since crude prices plunged two years ago.

Friday’s deal lifted Total’s proceeds from disposals since the start of 2015 to $8.6bn — more than 80 per cent of the $10bn target set for the end of next year. Analysts have speculated that this figure could be revised upward.

Other Total assets up for sale include parts of its North Sea oil and gas portfolio. A queue of big energy groups is trying to reduce exposure to one of the world’s oldest and highest-cost offshore basins.

However, weak oil prices have made upstream exploration and production businesses hard to offload as potential buyers seek fire-sale prices while sellers hold out for a so-far elusive recovery.

Recent deal activity has been heavily concentrated in mid- and downstream assets including pipelines, refineries and marketing businesses, as well as chemicals units such as Atotech.

Analysts said the $3.2bn sale price for Atotech — 11.9 times 2015 earnings before interest, taxes, depreciation and amortisation — was in line with expectations. The Berlin-based business makes chemicals for circuit boards and semiconductors used in electronics.

People involved in the process said Carlyle was eliminated from an earlier round of bidding, leaving BC Partners and Cinven in pole position. However, a deal failed to materialise and Carlyle was invited in recent weeks to table a fresh offer. The auction was run by Barclays.

Patrick Pouyanné, chairman and chief executive of Total, said Carlyle would “enable Atotech to pursue its growth ambitions” — hinting at the constraints on his own company’s ability to finance expansion at a time when capital expenditure is under intense pressure from low oil prices.

Other businesses earmarked for sale by Total include its Italian petrol station joint-venture with ERG, the Italian energy company.

Disposals and cost-cuts have helped Total weather the downturn in energy prices better than some rivals. Its earnings fell by 30 per cent in the second quarter — but this was half the average 60 per cent drop suffered by Royal Dutch Shell, BP, ExxonMobil and Chevron.

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