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Unilever to sell chemicals business for $8 billion

May 7, 1997

LONDON (AP) _ Unilever, a conglomerate best known for consumer products like Dove soap, Breyers ice cream and Lipton tea, is selling its international chemical businesses for $8 billion to Imperial Chemical Industries.

ICI chairman Sir Roger Hampel said today the purchase will make ICI ``a formidable new force in specialty chemicals.″

Unilever has been making money in the chemicals operations but said in February it wanted to get out so it can focus on the sales of consumer goods such as foods and soap, which account for 90 percent of its business.

Analysts said Unilever was wise to sell now, when the chemicals businesses were in fine shape, rather than in a few years when they likely would have required substantial investment to remain competitive.

As soon as the for-sale sign went up, London-based ICI began aggressively pursuing the deal, quickly entering what a Unilever spokesman called a preemptive bid.

Unilever chairman Niall FitzGerald said the company would use the cash to reduce its debt, then to develop the business by expanding some operations and possibly buying other companies.

Unilever, one of the world’s biggest consumer products groups with headquarters in London and Rotterdam, said the deal will give it a one-time gain of $5 billion.

Investors pushed ICI up by 4.5 percent by late afternoon on the London Stock Exchange. Traders apparently thought ICI got a bargain after some analysts had estimated the price could exceed $9 billion. Unilever shares were little changed.

The subsidiaries Unilever plans to sell are:

_National Starch and Chemical Co., which produces industrial adhesives, resins, specialty chemicals and specialty starches, based in Bridgewater, N.J.

_Dutch-based Quest International, which produces food ingredients in Naarden, the Netherlands, and fragrances and flavors in Ashford, England.

_Unichema International, which makes oleochemicals and nickel catalysts, based in Gouda, the Netherlands.

_Crosfield, which makes inorganic chemicals from silica and alumina, based in Warrington, England.

ICI, which makes chemicals and explosives and is the world’s largest paint producer, will seek shareholder approval of the purchase at a special meeting on June 16.

Unilever seems unlikely to make any major acquisitions with its new pile of cash, according to John Campbell, an analyst who follows the company for Paribas Capital Markets in London.

Recent speculation has centered around the possibility that Unilever might bid for Reckitt and Coleman PLC, the British group that makes the spicy Coleman’s mustard; the U.S. pickle and ketchup maker H.J. Heinz Co. of Pittsburgh, or Quaker Oats Co., based in Chicago.

But none of them are up for sale and hostile takeovers aren’t Unilever’s style, Campbell said. He predicted Unilever is more likely to grow by making small- and medium-sized acquisitions, such as buying dominant ice cream makers in countries where it has a small local market share.