Zeneca sells loss-making dye business for pounds 150m
Thursday 09 May 1996
Stewart Adkins of brokers Lehman Brothers described the news as very positive. "The company was making no money or even a slight loss from the business, for which they are getting pounds 138m and the working capital back. That should be good for earnings and, more importantly, leaves them able to concentrate on what they do best."
With the $62m sale of the speciality inks business announced earlier this year, Zeneca has cleared out most of the poorly performing parts of its specialities division, he added.
John Mayo, Zeneca's finance director, said in March that margins in specialities should rise from last year's 5.4 per cent to above 8 per cent following the disposals.
Explaining the latest sale yesterday, a Zeneca representative said the market for textile colours has been extremely competitive and very turbulent over recent years. "We have been looking at ways to improve the performance of the business for some time and came to the conclusion it would be better off as part of a larger group."
Like BASF's existing operation, the Zeneca business is one of the six largest textile dye producers in the world. Together they will become the third largest group, behind Distar, created from the merger of the separate dyestuffs operations of Hoescht and Bayer of Germany, and Ciba of Switzerland.
The Zeneca business dates from the formation of ICI, the drug group's erstwhile parent, in the 1920s. Its sales have been falling recently, dropping from pounds 224m in 1993, to pounds 213m in 1994 and just pounds 202m last year, when it made "a small loss".
But Albrecht Muller, head of BASF's textile and leather dyes and chemicals division, said: "In the context of the strategic re-orientation of our textile dyes business, merging the activities of BASF and Zeneca signifies an important step forward". The company said the merger of the two businesses would considerably expand BASF's business in dyes for cellulosic fibres and greatly improve its position in other dye sectors.
The sale should throw up a substantial capital gain, given that the business had net assets of only pounds 65m last year. The operations being transferred include sites at Ellesmere Port in the UK, Brazil and the US. Around 730 employees will move over to BASF.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...