ICI, once a sprawling conglomerate, will be tightly focused on paints, speciality chemicals and adhesives after news on Wednesday that it is selling off its Quest flavours and fragrances business to Swiss rival Givaudan for £1.2bn.
The move, by chief executive John McAdam, would seem to scrub ICI’s balance sheet clean. A statement said that aside from £70m in tax and deal-related costs, some £230m of the proceeds will be put towards reducing the group’s pension deficit, with the remaining £900m will be used to wipe out group debt.
Quest, which is based in the Netherlands, had sales of £560m in 2005 and a trading profit of £52m. While ICI said on Wednesday that the business was expected to improve operating performance and margins in the medium term.
The move to sell the business marks an important break for ICI. Quest, along with National Starch, was acquired from Unilever in 1997 under a transformational plan launched by former chief executive Charles Miller Smith.
But the strategy ran into problems and executive heads quickly rolled. With Quest in particular, software glitches with a new logistics system four years ago led to an exodus of customers and triggered a group-wide profit warning.