Selling pigments

Staines, UK-based Elementis has agreed to sell its Global Pigments business headquartered in East St. Louis in the US to Rockwood Specialties Group for $140 million (£70 million) in cash.

Elementis Pigments is a producer of synthetic iron oxides and complementary products.

In the year ended 31 December 2006, Pigments' reported operating profit, before exceptional items, was £6.1 million on sales of £94.2 million with net assets of approximately £42 million, excluding cash and debt. Gross assets were approximately £61 million.

After taking account of transaction costs and estimated net assets at the time of completion, Elementis expects to record a pre-tax gain on sale of approximately £20 million. The gain will be recorded as an exceptional item in the 2007 financial statements.

The price represents a multiple of 2006 operating profit (earnings before interest and tax) of 11.5 times.

Completion is subject to regulatory approvals, including a filing under the Hart Scott Rodino Act in the US, and is expected to take place before the end of 2007.

Net proceeds from the sale will initially be used to reduce net borrowings, but the Elementis board is reviewing other potential uses and will provide an update before completion.