The deal, which analysts said was a full price at almost three times Seven Seas' annual sales of pounds 59m, was the latest transaction in a blizzard of corporate activity since last summer when Hanson moved seriously into the electricity market with the acquisition of Eastern Group, the regional electricity distributor.
The pounds 2.5bn cost of that purchase, together with the more than pounds 2bn cost of buying five power stations from PowerGen and National Power, sent Hanson's gearing well over 100 per cent and prompted a rash of disposals.
Sales have included the withdrawal from North American timber, with the disposal of Cavenham Forest Industries, to raise pounds 1.3bn. The flotation of Suburban Propane in March chipped in a further pounds 510m and there have been smaller sales, including the former RECs' pump-storage business, raising pounds 70m, and Eveready of South Africa for pounds 84m.
Hanson is now more or less in shape for its planned four-way split into its core constituent businesses and yesterday Christopher Collins, vice-chairman, promised the demerger was on course. He said the chemicals and tobacco arms would be ready to be spun off by the targeted date of Hanson's September year-end with Energy being cast adrift by the end of the calendar year.
Hanson's shares closed 1p lower yesterday at 196.5p, confirming the market's continuing scepticism about Hanson's prospects, whether in one slice or four. As the chart below shows, they have underperformed the rest of the market by a sizeable amount since the Eastern acquisition.
Seven Seas was acquired in 1986 as part of Hanson's purchase of Imperial Tobacco, Britain's second-largest cigarette manufacturer. As part of a bigger package it is not possible to say how much it was valued at 10 years ago, but Derek Bonham, chief executive, said the business had "achieved continuous growth with Hanson".
Seven Seas will continue to be based in Hull, where most of its products are made and the jobs of its 400 staff are understood to be safe. Edward Roberts, the head of Merck's pharmaceutical unit, said the acquisition is part of a drive to boost sales of over-the-counter medicines. He said the company will look to take Seven Seas to other European markets.
Lutz Kunert, an industry analyst in Frankfurt, said sales at Seven Seas are expected to grow about 10 per cent in 1996, in line with the growth of over-the-counter drugs sales as a whole.
"It is a very interesting move by Merck,'' he said. "The company has not yet reached critical mass in over-the-counter medicines, but cuts in health budgets round the world mean OTC is a good place to be.''Reuse content