By Anthony Gould
The vogue for abandoning diversification in favour of focus was re-emphasised last week as ICI, then Unilever, announced sell-offs in the chemicals sector.
Unilever, the Anglo-Dutch group, is to sell its profitable speciality chemicals business. The expected trade sale – which should raise at least £5bn – should be completed by the autumn, said Niall Fitzgerald, its UK chairman.
The money will be used to pay off £1.7bn in debt and finance acquisitions in the consumer goods market. Analysts cite Reckitt & Colman and Smith & Nephew as the most likely UK targets.
The division, which has 2,500 employees in the UK (out of 15,800) comprises four companies: National Starch and Chemical Company, which makes industrial adhesives and starches; Quest International, a fragrance and flavourings business; Unichema International, which makes ingredients derived from natural oils; and Crosfield which produces chemicals based on silica and alumina.
The group revealed pre-tax profits up 15% to £2.7bn. The speciality division recorded sales of £3bn, and contributed 13% of profits.
Possible bidders include big names such as Roche, Bayer, BASF and Henkel, DuPont, Akzo Nobel and even ICI.
ICI itself is to sell off a business: the Tioxide pigments group. ICI’s chief executive, Charles Miller-Smith, formerly Unilever finance director, said ICI was to concentrate on the paints market and wanted to divest itself of cyclical businesses.
Over the next 18 months the company will seek a sale, merger or flotation of Tioxide, which has assets of £700m and annual sales of £600m. Tioxide’s main UKplant, on Teesside, employs 800 people. No job losses are expected this year.
ICI profits fell from £951m to £603m, mainly because of rising raw materials costs.