ICI set to approve splitting of group

IMPERIAL Chemical Industries is expected to give the go- ahead this week to radical plans to split the group into two separately quoted companies - one comprising Zeneca, the group's pharmaceuticals andagrichemical interests, and the other the bulk chemical interests.

At the same time, it will announce proposals for Zeneca to raise up to pounds 1bn of new equity, either through an international offer of new shares or a rights issue.

The plans have caused controversy in the City, with some merchant bankers and stockbrokers arguing that there would be no need for ICI to raise new money if it remained a single company.

To some extent this is being reflected at board level within ICI, where several directors have been expressing reservations about what amounts to the most dramatic shake-up since the company was formed in the 1920s.

Well-placed sources denied rumours of a boardroom split over the issue but conceded there had been 'a lively debate'.

Sir Denys Henderson, the chairman, has kept non-executives informed as the plans developed and believes unanimity has now been achieved.

The decision is due to be taken formally at a board meeting on Wednesday and announced the following day with the group's full-year figures.

Fears in the stock market that the group will immediately announce a pounds 1bn conventional rights issue to accompany the figures appear misplaced.

ICI said when it first announced the plans in July that consideration would be given to Zeneca raising the new money - not ICI as a whole - and this still seems to be the favoured route.

However, Sir Denys is believed to be keen for existing ICI shareholders to be given preferential treatment in any offering of new Zeneca shares.

Financial advisers have tended to favour the different route of an international offer of new shares.

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