22 November 2006 08:50 [Source: ICIS news]
SINGAPORE (ICIS news)--Imperial Chemical Industries (ICI) has agreed to sell Quest, its flavours and fragrance unit, to Switzerland-based Givaudan for £1.2bn ($1.5bn) in cash, the company said on Wednesday.
The disposal proceeds from the sale will allow ICI to focus on achieving higher levels of profitable growth from its strong coatings, adhesives and other specialty chemicals businesses, ICI’s chief executive John McAdam said in a statement.
According to ICI, £70 million will be used to provide for deal-related tax and costs. Of the balance, about £230 million will be used to reduce ICI’s post-retirement benefit deficits and around £900 million will be used in the near term to eliminate net debt.
It expects the transaction to be earnings neutral in 2006, have an implied current year earnings before interest and tax multiple of over 15 times, and give rise to a profit after tax of around £900 million.
It also expects the transaction to be completed in the first quarter of 2007, upon approval.
Under ICI’s ownership, Quest was forecast to improve operating performance in the medium-term, said ICI, noting that the £1.2bn consideration it obtained reflects "the strategic value of the business".
The deal will be accounted for as a special item in ICI’s income statement when it is completed. Quest will be treated as "held for sale" in the year-end accounts, ICI said.
Details of an extraordinary general meeting, which will be held in due course, will be announced separately, it added.
In 2005, Naarden, Netherlands-based Quest had sales of £560m and a trading profit of £52m. It employs around 3,400 globally with major activities in the US, UK, Continental Europe and the Asia Pacific.
As at 31 December 2005, Quest had gross assets of £374m.
At 09:33 GMT, ICI's share price had surged 9.04% to 422 pence on the London Stock Exchange. Givaudan's shares on the Swiss stock exchange had jumped 3.89% to SF1,068.
(€1.00 = $1.29)
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|