ICI puts a brave face on its failed double deal

11 January 1999 00:00  [Source: ICB]

ICI's proposed sales of its titanium dioxide business to DuPont and NL Industries and its PTA business in Pakistan to DuPont both fell through at the end of last year. Ronald Hampel, ICI's chairman, said: 'ICI's transition strategy remains unchanged, although we are disappointed that we have not been able to complete the transactions.'

ICI intends to maintain its dividend payment to shareholders and believes that 1997 profit will be around £315m ($524m) before tax and exceptionals, when announced on 4 February.

The TiO2 deals fell apart because the US Federal Trade Commission's terms to approve the deal were not acceptable to all parties. Under the complex proposed agreement, the business would have been sold to DuPont which would then have had to immediately divest the Grimsby, UK,plant to NL Industries, which was also to have bought ICI's 50% stake in the US jv with Kronos.

ICI is running the Tioxide business as usual while it evaluates the situation. A flotation is unlikely at the moment, the company said, and a trade sale of the whole business would be its preferred choice, although it is keeping its options open.

Prices for TiO2 are rising at the moment and so the business should generate cash for ICI in 1999.

The feeling about PTA is that DuPont became so frustrated with the difficulty in closing the TiO2 deal that it walked away from this deal in Pakistan. The plant is 61% owned by ICI Pakistan, with the remainder held by the Pakistani government and local shareholders. ICI said that it has recently started operating and is the only regional PTA plant in a country with a highly developed textile industry.

ICI is planning to spend £120m to cut around 1000 jobs to help get costs under control. ICI said the programme will pay back within two years and lead to annual savings of £70m.

Half of the jobs will go in the US paints business. Redundancies will arise as ICI streamlines the paint acquisitions it made over the past five years. Currently ICI Paints employs 4700 in the US.

In the UK jobs will be shed at the Crosfield division, which ICI failed to sell to WR Grace in October last year (ECN 19 October 1998).

A total of 120 out of 500 jobs in Warrington, UK, will go from the business which will be with ICI 'for the foreseeable future'. The remainder of the Crosfield job losses will be spread across the world. The balance of jobs will go at ICI's chlorine business.

ICI DISPOSALS COMPLETED

Asset

Proceeds ($m)

Date

London HQ

200

Q3 97

ICI Australia

1667

Q3 97

Polyester

1333

Q4 97

Forest Prods

233

Q4 97

Fertiliser, NH3

333

Q4 97

Methylamines

112

Q4 97

Polyester film

667

Q1 98

Explosives

508

Q1 98

Teeside utilities

500

Q4 98

Misc

280

-

Total

5833

-

Source: ICI