Chemicals deal marks final chapter in ICI's three-year transformation

ICI is close to completing a deal to dispose of its remaining industrial chemical operations, marking the end of a three-year programme of disposals.

ICI is close to completing a deal to dispose of its remaining industrial chemical operations, marking the end of a three-year programme of disposals.

The buyer of the businesses, up for sale since 1997, is Ineos, a privately owned company backed by Charterhouse Development Capital. It acquired ICI's acrylics operations last February, and the planned acquisitions will make it the UK's second-largest UK chemicals company, behind ICI.

Analysts expect the deal to trigger a cut of up to a third in ICI's dividend level from next financial year, to bring it into line with the level paid by other speciality chemicals producers. The board of what used to be the bellwether of the industrial economy will meet on Wednesday, a day ahead of the announcement of third-quarter results, to approve the new policy.

The move could see the payout fall by more than 10p from 32p a share this year, according to some estimates, although that will remain higher than the dividends typically paid by other speciality chemicals companies.

When it started to transform itself from a bulk chemicals manufacturer to a speciality producer in 1997, starting with the acquisition that year of Unilever's speciality chemicals businesses, ICI said it would maintain the dividend until that process was completed. The announcement of a cut now will therefore come as no surprise.

The businesses likely to be sold this week include the loss-making ICI Halochemicals, which produces CFC replacements, chlorine and related products, and Crosfield, which manufactures products derived from silica and alumina such as additives for detergents and coatings. The sale of the latter, actually a speciality business, was necessary to make Halochemicals attractive to Ineos.

ICI made pre-tax profits of £244m in the first half of this year, up from £166m in the same period in 1999. The industrial chemicals businesses made losses of £15m in the first half.