Coronavirus pushes up cost of Air Liquide's hand sanitiser unit

While supermarket sales of hand sanitisers are through the roof, the sale of a company that produces them has begun to get more complicated. In what has been described as the "coronavirus effect", potential buyers of Air Liquide-owned business Schülke, which makes hygiene products including hand sanitisers, hospital disinfectants and industrial cleaning products are being asked to increase the sum first envisaged when the sales process started last Autumn.

The initial expectation was that Schülke would fetch around €1-billion. However, the outbreak of the coronavirus has changed that. The increase comes, not as a result of the sudden uptick in demand in the company's products, but due to long-term forecasts predicting a rise in sales as the world becomes more hygiene-conscious, something that is expected to last long after the pandemic subsides.

The bidders for Schülke, which include various private equity firms, are cautious about overpaying for a business that produces "flavour of the month" products, reports quoted one potential buyer as saying. “Private equity will be very sensitive to the normalisation of sanitiser sales.”

Air Liquide has yet to comment.

The deadline for bidders to submit offers for the company is next week. Groups said to be considering bids include private equity firms Ardian, PAI Partners and EQT Partners, as well as rival hand sanitiser company Ecolab. All companies involved have declined to comment on the increased cost.

One potential buyer summed up the issue by saying the big question regarding the Schülke sale is whether or not consumers will continue buying and using more hand sanitisers when the coronavirus outbreak subsides. “Of course there’s extreme demand right now, but that’s not necessarily affecting the fundamental value of the company,” they said. “I think the spread of valuations is going to be pretty [wide].”

As the coronavirus continues to spread, consumers have been stockpiling hand sanitisers and workplaces such as offices, bars and restaurants are providing it for staff and customers. Supermarkets and high-street shops are routinely out of stock, with the product flying off the shelves as soon as it is put there. Amazon has also reported the rampant price-gouging of hand sanitisers by sellers looking to capitalise on the situation.

Schülke is based in northern Germany, in Norderstadt, near Hamburg. It employs around 1,000 people and has an annual turnover of €335-million, according to its website. Its products are sold to consumers and to business and institutions including hospitals, dental surgeries, and tattoo and piercing shops.

There has been a mark-up of online prices of Schülke products since the outbreak. A 500 ml bottle of its Desderman hand sanitiser was listed on eBay for £20 (€22), but was also listed as being out of stock. The same product is listed on a medical supplies website for €6.76 plus tax.

The Schülke sale comes at a time when merger and acquisitions processes are being disrupted by the outbreak of the virus amid volatile markets and travel restrictions making face to face meetings more difficult.

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