ECC paying pounds 202m for US chemical concern
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Your support makes all the difference.ENGLISH China Clays plans to switch its focus to speciality chemicals by buying Calgon of the US for pounds 202m, partly financed by its second cash call in 18 months, and demerging its construction interests.
Calgon, which Merck put up for sale in February, makes chemicals for the water treatment and paper industries. It does not include the consumer products business making water softeners for washing machines.
After demerger of the construction business - aggregates, concrete products and road surfacing - ECC would be left with Calgon, based in Pittsburgh, and its own china clay business in Cornwall, which was boosted by the purchase of Georgia Kaolin in the US in 1990.
Andrew Teare, chief executive, said: 'This deal is industrially driven. Fundamental to its success will be co-operation on research and development.'
ECC's research, which costs pounds 14m a year, is focused on solids whereas Calgon's is based on liquids, in particular water soluble polymers.
The acquisition, which has yet to be completed, will be partly financed by a one-for-eight underwritten rights issue at 350p a share to raise pounds 113m.
The figure compares with ECC's price yesterday of 424p, up 8p, and the 415p price at which shares were offered in last year's rights issue.
Plans for the demerger will be announced later in the year, though there is a possibility that the company will sell the construction business rather than float it off. Mr Teare is expected to devote the bulk of his time to the chemicals business rather than the construction company.
The construction business accounted for a third of ECC's pounds 1bn sales but less than a fifth of profit last year. But this was in recession - in 1990 it accounted for more than half the group's profits.
Explaining the demerger, Mr Teare said: 'The only thing that kaolin and building material have in common is the use of excavators.' He added that he hoped to be able to use the expertise in Calgon and the kaolin business round the world.
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