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Buyout firm Pamplona is in advanced talks to buy Ruetgers from rival Triton for more than 600 million euros ($739 million) after Asian suitors shied away from the business that makes chemicals from coal tar, three people familiar with the situation said.

Triton put the company up for sale earlier this year with a price tag of up to 700 million euros, hiring Goldman Sachs (GS.N) to run the sales process.

All companies involved declined to comment.

Ruetgers is one of a swathe private equity deals in Germany, as firms scour their portfolios for suitable sale candidates. As it often proves hard to find industrial buyers, private equity investors in many cases flip assets among themselves in deals known as secondaries.

In June, Swedish private equity group EQT agreed to buy German bandage BSN medical from investor Montagu while in July British buyout group Charterhouse signed a deal to acquire German industrial safety tools producer Bartec from rival investor Capvis.

Earlier this month, BC Partners said it would buy drugs maker Aenova from Bridgepoint [ID:nL6E8J64PG]

Triton had hoped to find a buyer in Asia, where the coal tar industry is growing fastest, and drew the attention of Indian chemicals company Himadri but was unable to reach a deal.

However, a sale to London-based Pamplona is not certain as the firms have still not agreed on the value of Ruetgers.

"This is a heavy, hairy, environmentally sensitive business, not a fine chemicals business, and should be valued as such," a person familiar with the situation said.

While Triton wants a price not far below 700 million euros, Pamplona is seeking to pay less, that person added.

With about 1,000 staff and eight productions sites, Ruetgers produces industrial pitch, oils and resins from distilling coal tar for use in aluminum smelters and steel industry.

The group recently established a Russian joint venture with steel manufacturer Severstal, a country in which Ruetgers sees scope to grow and where Pamplona has roots. The buyout firm was founded in 2004 by the former chief executive of Russia's Alfa Bank, Alex Knaster.

Triton, which specializes in buying companies in Germany and Scandinavia including businesses in need of restructuring, bought Ruetgers in 2008 from specialty chemicals group Evonik for an undisclosed sum.

Since then it has cut costs, upgraded several plants, started joint ventures and sealed bolt-on acquisitions.

($1 = 0.8121 euros)

This article is copyrighted by Reuters