Will ICI sell Tioxide businesses separately?

06 September 1997 00:00  [Source: ICB]

Speculation is mounting that ICI is to split up its Tioxide businesses rather than go for a straight flotation. Sources close to the industry say a flotation is unlikely to be successful following the disappointing sell-off of bulk producer Brunner Mond.

TIOXIDE PRODUCTION SITES AND 1997
CAPACITIES '000 TONNE/YEAR
Greatham, UK 76 000
Grimsby, UK 83 000
Calais, France 100 000
Huelva, Spain 80 000
Scarlino, Italy 80 000
Teluk Kalung, Malaysia 50 000
Burnie, Australia (closed June 1996)
Umbogintwini, South Africa 35 000
Lake Charles, US (shared with Kronos) 55 000

SOURCE: IBMA

It is known that several players, including DuPont and Millennium, are interested in acquiring Tioxide assets. However, both are known for their commitment to chloride technology and would put a low valuation on sulphate-route assets.

ICI declined to comment on a possible breakup of the Tioxide business; however, industry analysts say that a partial break-up could raise more money. 'A slimmed-down Tioxide would be more affordable,' said one source, 'and an even more manageable acquisition.'

DuPont, said to be in negotiations with ICI over its Spanish and Italian TiO2 units, is unlikely to bid for the entire Tioxide business as it would encounter regulatory problems in the US.

However, US sources indicate that Tioxide's 50% stake in the chloride plant in Lake Charles could be sold separately to Kronos, Kerr-McGee or a management buyout team. If this occurred, DuPont and Millennium would both overcome US anti-trust problems, paving the way for a bid for all Tioxide's other businesses.

Millennium could be interested in a straight buy but is not thought to have the cash. Kemira, meanwhile, is rumoured to be interested in buying the sulphate facility in Malaysia following the cancellation last year of the joint venture project with Ishihara.

According to one expert, ICI's valuation of Tioxide - believed to be £520m ($851m) - is 'optimistic' and a figure of £450m is more likely. A single buyer woula nave to spend up to 60% of the purchase price to change its technology from sulphate to chloride-route.

* ICI Australia is to keep hold of its paints and explosives business, countering rumours that a paints-for-explosives swap was imminent with the ICI parent group.





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