ICI in talks with US giant over pounds 2bn chemicals sale

ICI is negotiating the sale of a large part of its industrial chemicals division to DuPont, the American chemicals giant, for up to pounds 2bn. The deal is expected to include Tioxide, the titanium dioxide maker which had originally been slated for a stock market flotation.

The decision to sell the businesses was taken in principle as part of a strategy of moving out of low-margin "commodity" chemicals into higher- value, faster-growing and specialist products. ICI had already gone down that path with the acquisition of Unilever's speciality chemicals division for pounds 5bn in May.

Charles Miller Smith, ICI's chief executive, promised at the time of that deal to reduce the group's debts through a programme of disposals aimed at recouping pounds 3bn over three years. Roughly pounds 1bn is being raised by floating the group's 62.5 per cent stake in ICI Australia, details of which were revealed last week.

A deal with DuPont, which has long harboured ambitions to expand its presence in Europe, would achieve the promised disposals well ahead of schedule.

Profits in the industrial chemicals division have been hard hit by excess capacity and competition, sluggish growth and low prices world-wide. The division contributed only pounds 109m to operating profits last year, representing a profit margin of only 2.5 per cent.

The industrial chemicals division employs 15,000 people world-wide and the proposals will inevitably raise fears of redundancies, especially on Teesside, at Runcorn and several smaller sites in the UK. The competitive pressures on the division have been compounded this year by the strong pound.

A deal between the two companies would not be unprecedented. In an earlier agreement, ICI acquired DuPont's acrylics business while the American company took over ICI's fibres plant on Teesside.

Other businesses thought to be part of the sale include ICI Chemicals & Polymers.