Break-up talk hoists ICI

AT ONE time it would have been unthinkable, but ICI is fighting increasing break-up speculation. Shares in the fallen industrial giant jumped 10 3/4p to 134 1/2p on reports that Henkel of Germany wants to buy its National Starch unit for up to £1.8bn.

This comes shortly after another rival, Givaudan, expressed interest in buying ICI flavourings group Quest. ICI paid Unilever a whopping £4.9bn for National Starch, Quest and smaller unit Uniqema.

It overpaid for the businesses, which ran into difficulties and were the main cause of ICI's shock profits warning in March.

Its shares dived, pushing it out of the top 100 index for a spell and costing former chief executive Brendan O'Neill his job. His replacement, John McAdam, former boss of ICI Paints, quickly ruled out big disposals 'at this time'. He is speeding up cost cuts, with 700 redundancies.

But analysts are calculating ICI's value on a sum-oftheparts basis. Sreejith Banerji of ETrade Financial conservatively estimates it at £2.7bn, or 230p a share. He said McAdam must come up with a ' satisfactory timetable' to improve performance or face growing pressure for disposals.

ICI said National Starch, based in New Jersey, USA, is not for sale and claims the £1.8bn price tag is unrealistic. It said: 'Nobody has made an approach.'

But it admits things may change. 'We never rule anything in or out for the future. Our priority is to improve the performance of our business units.' Half-year results on 31 July are eagerly awaited.

ICI must show it has stemmed the loss of Quest customers after factory problems in the Netherlands, and improved prices at National Starch to soak up rising raw material costs.