Outlook: ICI/Huntsman

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The Independent Online
PHEW! Finally got it away. After more than a year of trying, Charles Miller Smith, chief executive of ICI, has at last managed to dispose of some businesses. He's been trying since 1997, when he embarked on his "transformation" of ICI by buying Unilever's speciality chemicals business for pounds 4.9bn. At the time, the transaction was widely seen as a triumph, but neither the City, nor Mr Miller Smith, anticipated the difficulty ICI would encounter in making the necessary disposals to pay for it.

Early attempts to sell ICI's industrial chemicals interests were floored by regulatory objections. The industry then went into one of its regular cyclical downturns. Conscious of ICI's need, those not constrained by competition concerns started to demand fire-sale prices. The unkind judgement would be to say that all this was entirely predictable and that Mr Miller Smith took a quite unacceptable risk with his shareholders' money in embarking on this course.

Perhaps, but what's done is done, and ICI now seems to be making a reasonable fist out of extricating itself. The sale to Huntsman Corp is at a lower price than originally hoped for, nor does it offer the clean break ICI might have wanted. ICI will retain a 30 per cent stake for at least the next three years. But it does put ICI's planned disposal programme back on course, and that in itself is reason for relief.

Even so, ICI's market capitalisation continues to languish at less than it paid Unilever for the speciality chemical interests, despite the recent pick up in the share price. Mr Miller Smith's strategy for ICI is hardly going to go down as one of the great corporate transformations of the decade, but at these depressed levels the stock market may be judging him too harshly. Certainly yesterday's deal could mark a turning of the tide, both for the share price, and for his own somewhat damaged reputation.

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