Blagden announces U-turn on strategy

BLAGDEN, the troubled chemicals and industrial group, yesterday executed a 180-degree change in its strategy when it pulled out of talks with potential bidders, parted company with its chief executive, and announced plans to hit the acquisition trail.

Shares in Blagden plunged 21 per cent to 136.5p as the group announced that it had ended two-month-old takeover talks after the company's board was "unable to agree terms which it considered would be acceptable to shareholders".

David Kendall, the chairman, said the management would now concentrate on pursuing acquisitions "in a market place which is continuing to soften".

He added that the company had been in "active discussions" with several targets which would add to Blagden's manufacturing and speciality chemical distribution units. Blagden has a cash pile worth around pounds 80m.

Dick Searle, Blagden's chief executive of the past four years and the manager credited with helping to turn the group around, will be leaving the company at the end of December.

Most of his responsibilities will be taken over by David Roache, who will carry on as finance director. Eryl Morris, the former deputy chief executive of Courtaulds, the chemicals group, and currently a non-executive director of Blagden, will become deputy chairman.

David Kendall, Blagden's chairman, said Mr Searle's departure "reflects the size and composition of the group going forward".

The upheaval follows Blagden's earlier decision to concentrate on its speciality chemicals operations - a move that prompted the sale of its packaging and protective equipment divisions.

Several large groups, including ICI and Elementis, have been concentrating on speciality chemicals in the belief that the market for those products is stable and relatively predictable.

However, the move has been undermined by the effects of the world economic slowdown, which has knocked demand.

Moreover, many analysts believe that small chemical companies are not large enough to survive on their own, and will be forced to sell up to larger predators.

In the past year, UK-listed chemical companies including Allied Colloids, Inspec and Courtaulds have all been taken over by larger predators.

Although Blagden never revealed the names of its suitors, the company is believed to have been in discussions with several potential trade buyers.