The joint venture, Australian Vinyls Corp, is 62.6 per cent owned by Orica (formerly ICI Australia Ltd), and 37.4 per cent owned by the U.S-Based Geon.

The business has annual sales of about A$200 million and its plants at Altona and Laverton in Melbourne can produce about 230,000 tonnes of vinyl a year.

The company, born through the merger of Orica's Australian PVC resin and compound business and Geon's Australian vinyls business Auseon, started in August last year.

Orica spokesman Mike Feehan said the divestment was part of Orica's strategy to focus on what it regarded as its four product growth platforms, mining, agriculture, consumer products and chemicals.

"What we have always said is that we run our plastics businesses to maximise our shareholder returns and it's our view that it's best served inthis case by floating Australian Vinyls Corp," Feehan said. Chemical company analysts were puzzled at Geon's decision to exit rather than buy the business from Orica, but welcomed the announcement from Orica's point of view.

"It's a strategic move for them (Orica). They want to get out of plastics and this is certainly a positive move in a strategic sense," said a Sydney-based analyst.

Analysts said it was difficult to value the joint venture because a full year of earnings had not previously been broken out in the accounts of either company. They speculated the offer could raise A$125 million to A$150 million.

The estimates were based on an earnings margin for the business of about nine or ten per cent of sales.

Analysts said this type of business typically sold at a multiple of eight to ten times earnings.

"Orica has indicated the earnings margin has improved a lot since the merger, I think from about three or four per cent to about nine or ten per cent," one analyst said.

Geon director ofcorporate and investor affairs Dennis Cocco said from the United States that Geon hoped to float the operation by the middle of July. Cocco said no price for the operation had been set yet and could not give details and earnings.

"But I know that the performance (since the formation of the joint venture) has been better than we expected," Cocco said.

"When we formed the joint venture with ICI the intention was to monetise our position there," he said.

He said Orica and Geon expected to release a prospectus within the next two to four weeks.

Merrill Lynch and SBC Warburg Dillon Read have been appointed as advisers to the float.