Business Blog: Hoover’s Business Insight Zone

With the exceptions of a few small holdouts like Hong Kong and Gibraltar, the sun set on the British Empire shortly after World War II. But not until this week did the sun set on British ownership of Imperial Chemical Industries (ICI), long revered by Britons as a symbol of their nation’s industry, and still a major player in the global markets for paint and industrial chemicals. Earlier this summer, ICI rejected the initial $14 billion overture of its Dutch rival Akzo Nobel, the world’s top paint company and an important player in chemicals and pharmaceuticals. But Akzo went back to the drawing board and recruited Germany-based Henkel, which makes cleaners and other chemical-based goods. The pair of Continental buyers sealed the deal after they sweetened their offer for ICI to more than $16 billion. All going to plan, the buyout should close by the end of 2007.

The pride of Britain has been wounded in the transaction, at least if the opinion pieces in Britain’s national news dailies are any indicator. (A sample from the Scotsman: “The sad surrender of Imperial Chemical Industries represents the latest chapter in an unfolding story of important Brits being snapped up by international buyers.”) Yet perhaps the sting should be dulled by now, since ICI had already shrunk over the years through divestments including Zeneca (now part of AstraZeneca), Uniqema (to Croda), and Quest (to Givaudan). Once the buyout is done, Akzo and Henkel plan to divide ICI’s assets between them. Henkel will pay Akzo about $5 billion for the electronic materials and adhesives units of ICI’s National Starch and Chemical subsidiary. Akzo, meanwhile, will absorb ICI’s other operations — including the Dulux and Glidden brands — and thereby extend its own empire of paint.

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* This article first appeared on our Company of the Day page on 17 August 2007.