The company, which this week received a pounds 408m bid from US rival Albemarle and also had an approach from Rhodia of France, is preparing to cut around 200 of its 1,800-strong British workforce at a cost of pounds 1.2m.
The job losses are likely to be spread among A&W's four plants in Avonmouth, Birmingham, Manchester and Cumbria. Insiders said that about 50 people had already been told they were to lose their jobs.
The redundancies follow last year's sweeping restructuring, which cost pounds 1.2m and caused the departure of 200 people.
Paul Rocheleau, the chief executive, said the measures were needed to cut costs in the face of tough trading conditions.
The UK business of A&W, which makes phosphates for detergents and carbonated drinks, had been hit hard by the strength of the pound, the loss of major customers and a slump in exports to Asia-Pacific, he added.
"These measures are very painful, but we have to reflect the economic reality we are in," he said. Mr Rocheleau pointed out that A&W's final results yesterday underlined the company's plight.
Pre-tax profit suffered a pounds 13m hit from the pound and the Asian crisis and fell by 20 per cent to pounds 48.3m. The chief executive said trading in 1999 would remain tough as there were "few signs that the economic climate and market conditions... will show any near-term improvement".
Despite Mr Rocheleau's downbeat comments, industry experts believe that Rhodia or another bidder could trump Albemarle's agreed 130p-a-share cash offer.
Rhodia, owned by the drug company Rhone-Poulenc, yesterday said that it was still considering whether to launch a counterbid.