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By Ludwig Burger
FRANKFURT (Reuters) -German diversified group Merck KGaA is preparing to put its pigments business up for sale to fund investments at its drugs and electronic chemicals divisions, daily Handelsblatt reported on Monday.
The business, which is known as Surface Solutions, could be valued at close to 1 billion euros ($1.08 billion) in a transaction, the newspaper citied people familiar with the matter as saying.
Surface Solutions, which makes pigments for a pearlescent or metallic shine in coatings, plastics and cosmetics, is part of Merck's Electronics division, which mainly makes chemicals for semiconductor production as well as liquid crystals and organic light emitting diodes for display screens.
Handelsblatt said a sale could start in the next few months.
Financial publication Mergermarket on Feb. 10 reported Merck was in early stages of deliberations about strategic options for the business, citing sources familiar with the matter.
Merck, which declined to comment, is benefiting from strong demand for its Life Science unit's lab equipment as customers in the biopharmaceutical industry explore new technologies.
Merck's own drugs division, which is small by industry standards, has suffered recent product development setbacks.
Surface Solutions posted an 11% rise in revenue last year to 410 million euros, recovering from a slump in 2020 due to the pandemic, Merck's 2021 annual report showed.
The unit's main customers are in the automotive and cosmetics industries, the report said.
($1 = 0.9240 euros)
(Reporting by Ludwig Burger; editing by Paul Carrel and Jason Neely)