The collapse of the sale of ICI's Tioxide division to the US companies, DuPont and NL Industries, will further hamper the group's attempts to reduce its debts. These have ballooned following the pounds 4.9bn purchase of Unilever's speciality chemicals division in 1997, and stood at pounds 4.4bn last October.
Shares in ICI reacted badly to the latest bout of bad news, falling by 6 per cent to 492p and wiping pounds 200m from the company's value. ICI shares are now 60 per cent below their peak of last May following a string of profit warnings and failed disposal attempts.
Meanwhile, the credit ratings agency, Standard & Poor's, revised its outlook for ICI from stable to negative.
ICI said it had scrapped the sale of its Tioxide business in the US to DuPont and the sale of its Tioxide businesses outside North America to NL Industries after failing to get approval for the two deals from the US Federal Trade Commission (FTC) under acceptable terms.
ICI will now consider three alternatives for Tioxide - sale to another trade buyer, sale to a financial buyer, or flotation, which was the original plan for the business.
Separately, ICI said it had called off discussions with DuPont about setting up a plant to make pure terephthalic acid in Pakistan.
This is the second time the FTC has blocked an ICI disposal. In October last year ICI was forced to call off the $455m (pounds 275m) sale of its Crosfield speciality chemicals business to W R Grace after the US regulator failed to approve the deal on acceptable terms.
In total ICI is shedding 1,000 jobs, half of which will be in its US paints division. The 500 UK job losses will fall mainly on ICI's halochemicals division in Runcorn, Cheshire, which makes chlorine, caustic soda and dry cleaning fluids. About 120 jobs will be shed at the Crosfields industrial specialities division in Warrington.
Charles Miller Smith, ICI's chief executive and the driving force behind its ambitious restructuring programme, conceded that the company had experienced a "rumbustious" start to the new year and said the collapse in the share price was painful. But he maintained that the group strategy of shedding its bulk chemicals activities and moving into less cyclical specialities chemicals, such as starches and flavourings, was paying off.
Shrugging off suggestions that his position as chief executive might now be vulnerable, Mr Miller Smith said: "The strategic direction is on course, on track and delivering."
He said that the disposal programme had been a success, with gross proceeds of pounds 3.5bn since May 1997, more than pounds 1bn of the sum having occurred in 1998. ICI had successfully disposed of more than 40 businesses, while only three deals had "cratered", he said.
In an attempt to ease stock market nerves, ICI said it intended to maintain the dividend for the year ended 31 December at 32p a share and forecast profits before exceptional items of at least pounds 315m, compared with analysts' estimates ranging from pounds 295m to pounds 350m.
ICI will take a pounds 120m exceptional charge to cover the redundancy programme, but it expects to generate cost savings of pounds 70m a year with payback in under two years.
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