According to several industrial sources and mainstream media outlets, U.S.-based chemical maker DuPont has launched the preliminary sale process of its car paints business, which is anticipated to bring in more than $4 billion.
Reuters reported the company’s adviser on the agreement, Credit Suisse Group had sent financial resources connected to the unit sale to concerned clients and the potential sale is also expected to draw interest from several chemical companies.
DuPont’s coatings business reported sales of $1.1 billion in the fourth quarter of 2011.
The primary customers of DuPont include Maaco and other auto paint refinishers while Ford Motor and General Motors are also key customers.
DuPont could sell just the OEM component, keeping the more lucrative paint refinishing business.
The performance coatings operations contributed about 12 percent of the company’s $31.5 billion revenue last year and 5.1 percent of operating income.
Coatings for refinishing vehicles accounted for almost $1.7 billion of sales last year, new car coatings totaled $1.2 billion and sales of powder and liquid coatings were about $950 million. While reporting better-than-expected first quarter results, U.S. paint major Valspar said it is not in the race to bid for the DuPont paint business. Gary Hendrickson, chief executive of Minneapolis-based Valspar, said the DuPont unit was “a little too big a bite for us”.
Other large paint manufacturers, such as AkzoNobel, along with private-equity firms are seen as potential buyers for the business unit.
Hendrickson said the company still faced a sluggish U.S. housing market as well as other demand challenges, notably in Europe and China.
He said the Chinese market is expected to pick up in the second half of the year after a flat performance in the latest quarter, and Valspar also sees costs for raw materials such as the titanium dioxide used to whiten paint rising by mid-single digits this year.
Valspar reported profit of $55.8 million for the quarter to compared with $33.4 million a year earlier.