ICI independence in jeopardy after Akzo sale

15 March 2007 15:15  [Source: ICIS news]

LONDON (ICIS news)--ICI’s future as an independent entity has become less certain following Dutch Akzo Nobel’s Organon divestment, Charles Stanley equity researchers warned on Thursday.

 

“News that Akzo Nobel has sold Organon Biosciences for €11bn [$15bn], widely regarded as a very good price for the business, has increased the likelihood that it might prove the springboard for a rumoured £7bn ($14bn/€10bn) approach for ICI,” the researchers said in a note to clients.

 

However, they added that the Organon disposal would only complete in late 2007 and that this could mean an imminent offer may be unlikely.

 

“Investors should be aware that Akzo is itself a potential target and may not, therefore, be guaranteed to make an approach for the former UK industrial bell weather,” Charles Stanley said.

 

“Other potential predators, interested in building a global presence in coatings, include US businesses Valspar and Sherwin-Williams, although capitalised at $3bn and £9bn respectively both are smaller than the UK group.”

 

The equity researchers said they had upgraded the recommendation on ICI to Hold from Reduce, reflecting the progress the group had made in improving its balance sheet and the 60% probability that Akzo might be goaded into an approach.

 

ICI’s share price was 481.75 pence at 14:28 GMT on Thursday, up 1.8% on the previous close.

 

($1 = €0.76)

($1 = £0.52/€1 = £0.68)

By: Hilde Ovrebekk
+44 20 8652 3214

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