ICI is acquiring BASF's Western European acrylics business in exchange for its polypropylene interests. BASF will also make a payment, the amount of which has yet to be determined, to reflect the difference in value between the two businesses.
Acrylics, which are used in making baths and showers as well as aircraft windows and car lights, is one of the businesses in which ICI wants to develop a leading global position. It will be the world's largest manufacturer when its acquisition of Du Pont's acrylics interests, announced last April, is cleared by the US regulatory authorities. That was also part of an asset swap, with Du Pont taking ICI's nylon business in exchange.
The Du Pont deal will make ICI number one in the US market, adding to its manufacturing capacity in the Asia-Pacific region. ICI currently serves the European market by exporting from Britain, but the BASF deal will give it two manufacturing plants on the Continent, at Mainz in Germany and Barcelona, Spain.
The business has annual sales of pounds 60m, bringing ICI's acrylics turnover to pounds 360m, and is believed to be profitable although the margins are lower than the 15 per cent ICI has achieved in its better years. The 400 employees will transfer with the business when the deal is complete, expected to be by the middle of this year.
Sir Denys Henderson, ICI's chairman, said the deal would improve the group's ability to serve its European customers. 'This is a further demonstration of ICI's determination to focus on those businesses which have been selected for strategic growth and which have a strong global position,' he said.
ICI's polypropylene business uses technology licensed by BASF, which believes it has the capacity for above-average growth. ICI decided to dispose of it because it has a small share in a market dominated by the large petrochemical companies. Its sales last year were about pounds 135m and, like most other manufacturers, it made a loss.
The deal will leave BASF with a 12 per cent market share, putting it in second place after Shell, and doubling its capacity. The plants to be transferred are at Wilton, on Teesside, and Rozenburg in the Netherlands, bringing BASF's total plants in Europe to five.
Bryan Rigby, BASF's UK managing director, who addressed the Wilton staff yesterday, would not give a firm commitment to retaining all 530 staff, but said: 'We need the plant, we need the production and we need to develop the business.'Reuse content