ICI eyes buy-ups with £1bn war chest
ICI, the Dulux paints to adhesives and starch group, has a £1bn war chest to spend and is eyeing acquisitions in the developing markets of eastern Europe, Latin America and Asia.
The company, which yesterday reported an 8 per cent increase in underlying pre-tax profits last year, said that after the £1.2bn sale of its Quest flavours and fragrances division it would have net cash, allowing it to embark on a series of targeted acquisitions or one big deal.
Alan Brown, ICI's finance director, said the group was particularly interested in strengthening its presence in eastern Europe but was also looking at countries such as China, Indonesia and Thailand.
The European coatings and paint maker Sigma Kalon is due to be put on sale this year by its private equity owners Bain Capital and is likely to be valued at around €1.8bn-€2bn. ICI could be among the bidders.
There is also speculation, however, that ICI itself could be bought by a private equity firm or trade buyer, with the latest rumours centred around a bid from the rival Dutch speciality chemicals company Akzo Nobel, which reports results itself next week.
John McAdam, ICI's chief executive, refused to be drawn on the persistent bid rumours, saying: "Our business is to run the company. We have got a good plan and we are now in a position to get on the front foot."
The turnaround at ICI has seen its net debt come down from a peak of £4bn in 1999, after the acquisition of Unilever's speciality chemicals division, to just £329m as of December 2006. In the past 12 months, its shares have risen 36 per cent, comfortably outperforming the market. The Quest proceeds will give it net cash and also bring its pension deficit down to less than £1bn. It could take on £1bn of debt while still retaining its credit rating, said Mr Brown.
Pre-tax profits rose to £407m last year from £377m in 2005, with strong performances in most of ICI's markets apart from the US, where paint sales were hit by the slowdown in the housing and building markets.
Raw material price rises, a bugbear for ICI in the past because of the time lag in passing them on, were kept to 4 per cent and the group said it expected a slight easing of inflationary pressures in the coming year.
The only legacy business which remains from ICI's days as a bulk chemicals producer and economic bellwether is its PTA operation in Pakistan, which has highly volatile profit margins. Political sensitivities have so far prevented the sale of the business. Reliance of India would be a potential buyer if it were not for the strained diplomatic relations between the two countries.
Board creates magnetic field to achieve lift
Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets
George Lucas criticises the major Hollywood film studios
Film follows park rangers in the Congo
Does Chris Grayling realise what a vague concept he is dealing with?
Parties threaten resort's image as a family destination
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Banksy arrest hoax: Internet duped by fake report claiming street artist's identity has been revealed
- 3 Drink alcohol and eat meat to improve male fertility - but cut down on coffee, studies suggest
- 4 Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
- 5 The inventor of the Facebook 'like' button says he never made a 'dislike' button because he feared the 'unfortunate consequences'
Ukraine crisis: Donetsk 'tactical missile' explosion at factory sends blast wave across rebel-held city
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Banksy arrest hoax: Internet duped by fake report claiming street artist's identity has been revealed
Super-sized ships arrive in Britain: How big can they get?
Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
Amal Alamuddin calls for the return of the Elgin Marbles from Britain: 'Injustice has persisted for too long'
London bus driver 'kicks gay couple off for kissing'
Lord Freud: Tory welfare minister apologises after saying disabled people are 'not worth’ the minimum wage
iJobs Money & Business
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...
£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...
£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...