The sources said UBS is expected to send out information packages on LSI to peers such as Lanxess or Clariant as well as to private equity groups in October.
LSI has annual earnings before interest, tax, depreciation and amortisation of about 300 million Swiss Francs ($323 million) and may be valued at 10-12 times that in a potential deal, they said.
The Basel-based company, which announced the sale plans in July, was not available for comment, while UBS declined to comment.
LSI is divided into two units, one making microbial controls for paints, hygiene, personal care and wood treatment, and a specialty chemicals services business offering contract manufacturing to clients.
The division traces Lonza's industrial roots, which go back more than a century to when it made synthetic fertilisers.
In the first half of 2020, LSI's revenue decreased by 5% to 819 million Swiss Francs, while core EBITDA dropped slightly to 161 million.
Sales of products used in hygiene and home & personal care have increased during the COVID-19 pandemic, as has demand for vitamin b3 in feed applications. However, sales of products used in wood protection, oil and gas, crop protection and the composite materials business dropped.
After bulking up its main pharma business with a $5.5-billion takeover of U.S.-based drug capsule maker Capsugel in 2017, Lonza unloaded assets including its 1,200-employee water treatment and residential swimming pool care business last year to streamline activities.
($1 = 0.9233 Swiss francs)
By Arno Schuetze and Oliver Hirt