Deals and IPOs

Total seeks bids for $2.5B Blu-Tack maker Bostik: Sources

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Europe's second-biggest oil company Total, under pressure from shareholders to improve its cash flow and raise dividends, is looking to sell Blu-Tack maker Bostik, sources with knowledge of the matter told Reuters.

A sale of Bostik, which makes adhesives and sealants used in products ranging from aircraft components and building materials to diapers, could help the French firm raise up to 2 billion euros ($2.6 billion), the sources said, speaking on condition of anonymity as the matter is not public.

"Total does not comment on market rumors," a spokesman said. "The company regularly receives marks of interest for its specialty chemicals units, including Bostik, which it studies in the interest of the company and its workers," he added.

Bostik, which had 2012 sales of 1.55 billion euros and employs over 4,800 people in more than 40 countries, could attract several bidders in a fragmented global adhesive and sealants market worth over $20 billion, the sources said.

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It would likely appeal to rivals such as Henkel, H.B. Fuller, Sika, 3M, Dow Chemical, Momentive, RPM, Dow Corning and Konishi, they said.

Private equity investors are also expected to show interest, but could be put off by competition from industry players which should be able to offer higher prices thanks to potential cost savings and synergies, said one of the sources.

Total has yet to hire an investment bank to handle the sale, the sources said.

The group has long been expected by investment bankers to sell some of its non-core but highly profitable specialty chemicals businesses, which include rubber and isolation unit Hutchinson, and electronics and surface finishing specialist Atotech, as well as Bostik.

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Total has pledged to achieve free cash flow before dividends of $10 billion in 2015 and $15 billion in 2017, versus $2.6 billion in 2013.

The firm, which has taken a more active approach to managing its business in recent years - buying and selling assets more frequently -, has also said it would sell assets worth $15 billion to $20 billion by the end of 2014.

The French group sold $1.6 billion worth of assets in the first half of this year, essentially comprising the sale of Block 15/06 in Angola and the sale of an interest in Gaztransport & Technigaz (GTT).

It also disposed of its mining activities in South Africa to Exxaro Resources for $472 million in July and is expected by bankers to sell more assets in the coming months.

Like other oil majors, it has been under pressure to return more cash to shareholders after years of large investments, and has began to cut capital expenditure this year.