Unilever to sell speciality chem units to ICI

Thursday, May 8 1997

Unilever to sell speciality chem units to ICI

OUR BUREAU & AGENCIESÎ LONDON & MUMBAI, May 7: Unilever Plc said on Wednesday it agreed to sell its international speciality chemicals businesses to Imperial Chemical Industries (ICI) Plc for $8 billion in cash.

Unilever said the sale would result in an exceptional gain, before tax and expenses, of more than $5 billion. ICI planned to buy the following units:

US-based National Starch and Chemical Co, a producer of industrial adhesives and resins. The unit had a 1996 operating profit of about 213 million pounds on sales of 1.56 billion.

Quest International, a fragrance, food ingredient and flavour company based in the Netherlands, which had a 1996 operating profit of 69 million pounds on sales of 696 million pounds.

Unichema International, an oleochemicals and nickel-catalysts company with headquarters in the Netherlands, had a 1996 operating profit of 43 million pounds on sales of 476 million pounds.

British-based Crosfield, a global producer of inorganic chemicals based upon silica and alumina, had a 1996 operating profit 32 million pounds on sales of 205 million pounds.

Back in Mumbai, the Hindustan Lever board (HLL) indicated that it would consider in `due course' the impact of the sale on its Indian operations.

Hindustan Lever chairman KB Dadiseth on Wednesday said Unilever had agreed in February to sell National Starch and Chemical Company, Quest International, Unichema International and Crofield to ICI.

He said many of the product categories were represented with HLL and the board would consider the impact in due course, according to a statement.

Analysts, however, say the move makes sense in the long run as Hind Lever could now concentrate on its foods business.

Unilever said the sale of the businesses represented a multiple of operating profit of 14.5 times and a multiple of earnings of 23 times. For its part, ICI said the deal would have a neutral to positive effect on immediate earnings.

ICI is expected to complete the acquisition, which will be all debt-funded, in the middle of the year.

Unilever said cash from the sale would initially remove net borrowings from its balance sheet, but it added that it planned to use the proceeds to develop its business.

ICI said the acquisition was part of its strategy to shift its business profile toward speciality chemicals and reduce its exposure to commodity chemicals.

As part of its strategy, ICI said it planned to sell its 62.4 per cent stake in ICI Australia Ltd through a global equity offering. ICI expected its divestment programme, including the ICI Australia sale, to raise about 3.0 billion pounds ($4.9 billion) over the next three years. ICI said it was in talks with interested companies regarding its planned divestments.

Infrastructure Bond Issue