Zeneca nears deal on offices: Final talks on leaving ICI's headquarters for new building in Mayfair

ZENECA, the drugs and agrochemicals business due to be demerged from Imperial Chemical Industries in June, is close to signing a deal that will allow it to move out of the group's Millbank headquarters.

The group is believed to be in final negotiations to lease 43,000 sq ft of offices at South Audley Street, Mayfair, a new building developed by Arcona, the Swedish property group. The terms have not been disclosed, but it is expected that Zeneca will pay about pounds 30 a sq ft, with the first two years rent-free.

David Barnes, chief executive of Zeneca, made it clear when the demerger was given the go-ahead in February that he intended to leave Millbank within a year, although he aimed to stay within a mile of the ICI headquarters. Although the search began before the proposals were formally tabled, the company has only started formal negotiations with developers in the past two months.

Although the Mayfair building is new, it has been constructed to fit in with its Georgian surroundings - including specially designed Georgian windows, cast-iron railings and wrought ironwork. Arcona was negotiating with Merrill Lynch, the US investment bank, but is believed to prefer Zeneca because the bank was insisting on five-year breaks in the lease.

Zeneca's departure is likely to be just the first stage of ICI's withdrawal from its flagship headquarters. Ronnie Hampel, chief executive of the remaining paint, explosives and industrial chemical businesses, has also indicated he would look for new offices and Millbank would be sold.

ICI employs about 450 staff at its head office, but the number is likely to fall after the split. Zeneca intends to take between 75 and 100, while new ICI will have a head office staff of between 100 and 200 - and the final figure is likely to be closer to the lower number.