Chems distribution sale eyed in Stork, Muller merger

08 May 2000 11:41  [Source: ICIS news]

LONDON (CNI)--Dutch industrial group Internatio-Muller is to sell its chemicals distribution and wholesale pharmaceutical/drugstore products business as part of a plan to merge with compatriot industrial group Stork.

Stork and Internatio-Muller and Stork announced Monday they are looking at a merger of equals to be carried out by an as yet unnamed, special purpose company set up to acquire shares of both groups. The new business aims to deliver a one-stop portfolio of services to a range of industries - building, infrastructure, aerospace, shipping and textiles.

Internatio-Muller is to divest its businesses in chemicals distribution, wholesale of pharmaceuticals and drugstore products as well as port services which have turnovers of around Dfl 1.5bn ($608m/Euro680m), Dfl 1.5bn and Dfl 76m, respectively. No further details on the plans were immediately available.

Stork's divestment programme is already underway with the two-step sale of its Stork Engineering Group (SEG) to US company Jacobs Engineering. It plans also to sell its food processing activities.

The Dutch groups plan to merge on a 53:47 equity basis in favour of Internatio-Muller, pending due diligence checks. The merger document is expected to be issued to shareholders in late June and will describe in more detail a combined organisation with a market capitalisation provisionally estimated at Euro1bn ($893m).

Internatio-Muller and Stork expect their merged operations to achieve annual synergistic gains of some Euro40m by 2004 though increased sales, improved efficiencies and cost cuts.

They reported that the new company had proforma earnings before interest and taxes (EBIT) for 1999 of Euro194m. Supported by acquisitions, the merged operation aims to double its EBIT performance by 2003, and 'core' activities are to deliver annual average EBIT growth of 10-15% from the first full year after the merger, the target date for which was not disclosed and depends on regulatory approval. The improvement is expected from autonomous growth and synergies.

Net profits of the proposed merged business, on a proforma basis, were stated for 1999 as Euro128m including extraordinary items on turnover of just over Euro5bn. Before exceptionals the net profits were reported as Euro144m including Euro79m from Stork, adjusted for comparability. The 'core' activities delivered proforma operating profits of Euro168m on sales of Euro2.7bn.

Stork and Internatio-Muller plan to have more than Euro1bn for its acquisition plan, targeting purchases in the information/communications and industrial automation and maintenance sectors. They aim to fill their acquisition war chest partly by the proceeds of divestments.


By: Patrick Reynolds
+44 208 652 3214



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