04/29/2011 | Editor: Marion Henig
AkzoNobel has announced its intention to seek agreement from the Board and shareholders of ICI Pakistan Limited ("ICI Pakistan") to separate the organization's paints and chemicals businesses.
Pakistan - Under the terms of the proposal, AkzoNobel would retain direct majority control of the paints business by separating it into a new legal entity through a de-merger process approved by the Pakistani courts. Subsequently, AkzoNobel would dispose of its entire shareholding in the remainder of ICI Pakistan.
The entire ICI Pakistan business has been a subsidiary of AkzoNobel since 2008, when the company acquired Imperial Chemical Industries PLC. It is listed on the Karachi, Lahore and Islamabad Stock Exchanges, with AkzoNobel currently holding 75.8 percent of the total shares. Focusing primarily on the Pakistan market, 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.
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. But: During the last few months, AkzoNobel has been conducting a strategic review of the businesses and it became evident that ICI Pakistan's paints business would be of clear commercial benefit for the company. Although the remainder of the ICI Pakistan portfolio is made up of strong and promising businesses, they do not offer sufficient opportunity to create value within AkzoNobel's transformed portfolio and future strategic ambitions.
AkzoNobel believes that in order to provide the best growth opportunities for the activities carried out by ICI Pakistan (apart from paints), 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. Accordingly, AkzoNobel's intention would be to seek a new owner for its shareholding in ICI Pakistan through a formal sale process once the paints business is separated.
The procedure for achieving this strategic change would involve a two-stage process. Initially, two companies would be created through a de-merger process approved by the shareholders of ICI Pakistan and sanctioned by the Pakistani courts. Both would be listed and AkzoNobel would own 75.8 percent of each. The business, assets and liabilities of the paint business would be called AkzoNobel Pakistan Limited. ICI Pakistan would comprise all of the remaining businesses, assets and liabilities.
Once the de-merger is completed, AkzoNobel would undertake the formal process of identifying an appropriate buyer for its shareholding in ICI Pakistan.
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