AkzoNobel has announced plans to split off its paints business from ICI Pakistan and sell off the chemicals piece of the company.
The split would result in two companies: AkzoNobel Pakistan Limited (the paints business) and ICI Pakistan Limited (comprising all other businesses of ICI Pakistan).
AkzoNobel would retain a 75.8 percent share of AkzoNobel Pakistan Limited and dispose of its remaining shares in ICI Pakistan.
The entire ICI Pakistan business has been a subsidiary of AkzoNobel since 2008, when the company acquired Imperial Chemical Industries (ICI) PLC. ICI Pakistan’s main businesses are polyester fiber, soda ash, life sciences, chemicals and decorative paints. In 2010, ICI Pakistan’s revenue amounted to €305 million (about $436.1 million US).
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“The company confirms its commitment to Pakistan and sees a strong future in paints,” AkzoNobel said in a carefully worded statement. Although a recent “strategic review of the businesses” found that the paints business “would be of clear commercial benefit,” the “strong and promising businesses” that make up the chemicals business “do not offer sufficient opportunity to create value within AkzoNobel’s transformed portfolio and future strategic ambitions,” the company said.
AkzoNobel said it would be “most beneficial for all concerned if the company was transferred to a new owner who could commit to investing and help to realize its full potential.”
The breakup would occur in two stages. First, a de-merger would have to be approved by ICI shareholders and sanctioned by the Pakistani courts. Both would be listed, and AkzoNobel would own 75.8 percent of each.
The new paint business, including assets and liabilities, would be called AkzoNobel Pakistan Limited. The remaining businesses, assets and liabilities would become ICI Pakistan.
After the split, AkzoNobel would formally begin its search for a buyer for the chemicals business.
“AkzoNobel recognizes Pakistan as an important market and is committed to developing its ongoing coatings and paints business together with any other opportunities for its core activities in Pakistan,” the company said.