ICI sells explosives arm to Orica for pounds 223m

ICI's radical re-structuring made further progress yesterday when it sold its explosives businesses in Europe and the Americas to the former ICI Australia, now known as Orica, for pounds 223m. Orica, which was itself 62 per cent owned by ICI until earlier this year, said the move followed a competitive auction for the business.

The businesses form part of the original grouping of ICI's operations when the group was formed in 1926.

The move is part of a string of deals by ICI under which it is moving away from lower margin bulk chemicals to specialise in more profitable sectors such as coatings materials and speciality chemicals.

ICI paid pounds 5bn for Unilever's speciality chemicals business earlier this year and the proceeds from recent disposals are being used to replace debt.

Yesterday's deal includes the explosive operations in Canada, Latin America and Europe and its distribution business in the United States. The division made a trading profit of $3m last year on sales of $46m. ICI will book an pounds 85m profit on the deal. It is expected to be earnings enhancing.

Rob Margetts, ICI's director responsible for industrial chemicals and materials, said the deal re-united ICI's American and European explosives businesses with those of Orica, "recreating once again the global leader in the industry". It will have a global market share of 20 per cent.

The business manufacturers and supplies a range of bulk and packaged explosive and blast management services to the mining, quarrying, construction and allied exploration industries worldwide. The business employs 27,000 people.

ICI's explosive business has manufacturing sites in Canada, Mexico, Brazil and the UK.

There has been a flurry of disposals by ICI in recent weeks. Earlier this month it sold its explosive interests in Africa to Orica for $117m. It sold its UK fertiliser operations to a US company for pounds 200m last month. A raft of industrial chemical operations are due to be sold to Du Pont.

In October, Allan Spall, ICI's finance director said there were pounds 2.5bn of disposals still to go with Methanol with its gas businesses high on the list. The stock market has been impressed with the speed of ICI's transformation which some analysts expected to take three year to achieve.

However, the shares have lost some of their fizz. They shot from their year's low of 688p in the spring to 1108p on the back of the restructure announcement. Yesterday they edged 8.5p higher to 930p.

- Nigel Cope