Laporte bid for Inspec boosts chemical shares

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LAPORTE, the speciality chemicals group, is in discussions with the rival chemicals company Inspec that are expected to lead to an agreed takeover deal which values Inspec at pounds 598m.

Inspec shares rose 36 per cent to 332.5p, compared with the 340p per share offer price, as analysts said the bid price was unlikely to be topped by a rival bidder. The move pushed the share prices of second-line chemicals companies higher as analysts predicted a wave of consolidation in the sector, which has been hit by the strong pound.

A key figure in the Inspec takeover discussions will be its chairman, Dr John Hollowood, who guided the company to the stock market in 1994. He holds a 5.6 per cent stake valued at pounds 33.4m at yesterday's closing price. His share options are worth pounds 9.1m.

Laporte's broker, CSFB, was aggressively buying Inspec shares in the market yesterday, demonstrating the company's commitment to the deal. It is likely to be a cash offer as Laporte has pounds 130m in the bank.

Inspec was formed in 1990 after a management buyout of BP's speciality chemicals business. It bought Shell's speciality chemicals business for pounds 200m two years later.

Inspec is a leading player in speciality chemicals for the pharmaceuticals industry, while Laporte has three divisions; speciality chemicals, pigments and additives, and compounds and electronics.

Laporte said the deal would be a good geographic and strategic fit, and Inspec's distribution system was strong as a result of its BP heritage.

The bid came as Croda International, a rival chemicals group, reported a sharp fall in underlying profits from pounds 20.7m to pounds 17.6m. It blamed the fall on the strength of sterling and falling demand in South-east Asian markets.

Croda International shares were down by more than 5 per cent in early trading but ended 25p higher at 332.5p as a result of the Laporte bid.