The pounds 45m sale of the formaldehyde and resins business Blagden Chemicals to Borden International Holdings comes just five months after merger talks with Borden collapsed and the highly regarded chief executive Richard Searle left the company.
Last year Blagden sold its steel-drums business for pounds 98m with a view to spending the cash on acquisitions. Finance director David Roache said the decision to dismantle the business was taken after the failure to find any suitable acquisitions. "To break up your own business is a difficult conclusion to come to but it's the only one which will return value to shareholders," he said.
Jeremy Chantry, chemicals analyst at Credit Suisse First Boston, said: "It's quite an amazing decision, but they've done it in good faith."
Shareholders will receive 47p per share from the chemical sale. Mr Roache said he hoped to sell off the remaining chemicals distribution and optical businesses by the autumn, blaming falling raw materials prices and rising costs for the company's decision "to fall on its sword".
The sale announcement coincided with end of year results which showed a slump in operating profits of nearly 20 per cent to pounds 3.7m before exceptionals for the year ending 31 December 1998.
Analysts estimate a final break-up value of 160p to 180p. With the shares at 144p, down 2p yesterday, beleaguered shareholders should hold on and wait for the cash.