Promise of disposals lifts ICI

Imperial Chemical Industries (ICI) is planning to sell what remains of its industrial chemicals businesses in the coming year, in a move which could raise pounds 1.2bn. Peter Thal Larsen reports on the next stage of the chemical giant's massive restructuring.

The news came as ICI announced the completion of the sale of its polyester polymer businesses to DuPont, which was announced in July. The group also said further "substantial" disposals could be expected in 1998. ICI shares firmed 8p to 959p.

According to experts, businesses on the block include ICI's North American titanium dioxide interests; its Runcorn-based chlorine-manufacturing subsidiary and divisions making polymers and chemicals that replace ozone-destroying CFC gases.

Several announcements are expected before ICI reports its annual results in February. An ICI spokesman said the group was in talks about several potential deals, but refused to comment on specific cases.

Charles Miller-Smith, ICI's chief executive, has mapped out a future for the group in which it pulls out of cyclical, capital-intensive bulk chemicals in favour of specialised chemicals with a high value-added content.

That strategy inspired the acquisition of Unilever's speciality chemicals businesses in July for pounds 4.9bn. ICI subsequently targeted pounds 3bn of disposals over three years to reduce debt. But in a whirlwind of activity it has raised pounds 3.6bn in just six months.

Now the group is keen to complete the transition. Analysts also think ICI wants to pursue smaller bolt-on acquisitions in speciality chemicals. Further disposals would give it the firepower to do so.

"Basically, anything outside the paints, materials and speciality chemicals divisions is up for sale," said Phillip Morrish, chemicals analyst at Nikko Securities.

ICI's recent disposals have been sold for a multiple of about one times annual sales. But experts reckon the remaining businesses will fetch more modest prices. By applying a sales multiple of 0.6 to the industrial division's remaining pounds 2bn of turnover, Merrill Lynch analyst Robyn Coombs calculates that the unit is worth pounds 1.2bn.

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