ICI Proposes Merger with Courtaulds Successful negotiation of $504 million deal could result in world's largest chemical giant outside U.S. Through a possible merger between Imperial Chemical Industries and Courtaulds, Britain may soon have clearly the largest chemical and fiber company in the world—after Du Pont. Facing a melee of hurriedly summoned reporters, Paul Chambers, ICI chair man, announced this formally after an as yet untraced leak to London news papers set ICI's press office telephones ringing last week. Mr. Chambers says that ICI and Courtaulds have been having talks since September as a result of an offer from ICI to merge the two com panies. Courtaulds, Britain's largest fiber group, also has interests in fabrics, chemicals, wood pulp, packag ing, paint, plastics, and engineering. ICI, believing that "a merger is in the interests of the two bodies of stock holders and of the country," has offered to* exchange four of its ordi nary shares for every three* ordinary shares of Courtaulds. ICI will also exchange its 5% preference stock for Courtaulds' 5% and 6% preference stock. All stockholders would be en titled to dividends declared, or to be declared, by Courtaulds for the year ending March 31, 1962, and also to all dividends to be declared by ICI for 1962. At current market prices, ICI would pay about $504 million for Courtaulds stock. This is the largest bid ever made in the history of British mergers. It will be four to six weeks before a formal offer to Courtaulds' stock holders can be made by ICI, because of printing and other work involved. Although not all of Courtaulds' direc tors may be entirely in favor of the merger, particularly so since ICI broke the news on its own, it is strongly felt in British financial and industrial circles that the success of the merger plans is assured. Reasons for Merger. ICI gives several reasons for the proposed merger. For one, Britain's manmade fibers industry is mainly in the hands of three companies: ICI, Courtaulds, and British Nylon Spinners, a company jointly owned by ICI and Courtaulds. Considerable savings can be realized,
says ICI, in manufacturing, marketing, research, and development, and in capital expenditure if the proposed merger goes through. The merger would also help strengthen Britain's competitive posi tion in world markets. ICI believes that whether Britain joins the Euro pean Common Market or not (Mr. Chambers says he is confident that Britain will join), the disadvantage which Britain suffers will grow and be come more apparent "unless this merger takes place." A successful merger between the two companies would create a formi dable chemical and fiber giant. ICI now vies with Union Carbide Corp. for the position of the world's second largest chemical company (in sales) and dominates the chemical industry of Europe and the British Common wealth. Courtaulds is one of the world's largest rayon and synthetic fiber producers and has recently been expanding into petrochemicals, paints, plastics, and engineering. But Mr. Chambers emphasizes that the real impact of such a merger would be in synthetic fibers. He believes that synthetic fibers promise an exceptional growth rate, and that Britain should be in the forefront of the fiber field. Mr. Chambers, anticipating accusa tions of monopoly, says that if the merger succeeds and if Britain joins ECM, the ICI-Courtaulds company would not "be monopolists in ECM in any product." U.S. Penetration. Courtaulds re cently purchased over 100,000 shares of common stock in Koppers Co.
(C&EN, July 3, page 21). ICI has a fiber-producing subsidiary in the U.S. owned jointly with Celanese. Asked if a merged ICI-Courtaulds operation, having these assets in the U.S., would intensify ICI's efforts in the U.S. market, Mr. Chambers said that these were valuable assets and the U.S. fiber market has immense po tential. Certainly, he adds, an ICICourtaulds combination would be able not only to sell fiber manu factured in Britain in the U.S. but also to set up U.S. manufacturing subsidiaries. Overlapping jobs may raise prob lems. ICI says that the future of ICI, Courtaulds, and British Nylon Spin ners employees has been carefully con sidered. It thinks the employees re quired to match foreign competition and expand production will be no fewer than at present. Mr. Cham bers says that the main task, with re gard to employees, will be efficient redeployment. Mystery Leak. Mr. Chambers says that an unidentified person telephoned some London newspapers and leaked the information on the proposed merger. The informant posed as an ICI press officer. As a result, London's Daily Mail published first news of the possible merger. The original intention had been to hold a joint ICI-Courtaulds press con ference to announce news of the merger. Mr. Chambers said that about 50 people knew about the merger proposal, including ICI's board, Courtaulds' board, and various lawyers and accountants.
ICI-Courtaulds Combine Would Approach Du Pont inι Size Courtaulds Courtaulds Du Pont ICI & ICI (Year Ended Dec. 31, 1960)
(Year Ended Dec. 31, 1960)
(Year Ended Mar. 31, 1961)
Billions of Dollars
Sales Assets Net profits
$1.563 1.946 0.133
$0.481 0.641 0.029
$2.044 2.587 0.162 DEC.
$2.143 3.092 0.381
2 5, 1 9 6 1 C & E N
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