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
| Fertiliser, NH3 |
333 |
Q4 97 |
| Teeside utilities |
500 |
Q4 98 |
Source: ICI
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