Zeneca sells loss-making dye business for pounds 150m

Zeneca, the drugs group, is to sell its textile colours business to the German group BASF for up to pounds 150m. The intention to dispose of the loss- making operation had been flagged at the time of Zeneca's preliminary results in March, but the price obtained pleased the market, sending the shares 6p higher to pounds 13.73 yesterday.

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.

Start your day with The Independent, sign up for daily news emails
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
Arts and Entertainment
The sight of a bucking bronco in the shape of a pink penis was too much for Hollywood actor and gay rights supporter Martin Sheen, prompting him to boycott a scene in the TV series Grace and Frankie
footballShirt then goes on sale on Gumtree
Terry Sue-Patt as Benny in the BBC children’s soap ‘Grange Hill’
voicesGrace Dent on Grange Hill and Terry Sue-Patt
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
Arts and Entertainment
Twin Peaks stars Joan Chen, Michael Ontkean, Kyle Maclachlan and Piper Laurie
tvName confirmed for third series
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine