Hanson Reveals 2.82 Percent Stake in ICI, Analysts Expect Megabid
LONDON (AP) _ British conglomerate Hanson PLC said Wednesday it has bought a 2.82 percent stake in Imperial Chemical Industries PLC as an investment, but analysts said they’re expecting a takeover attempt.
Hanson has made a reputation for itself by buying companies then selling off their assets for a profit.
However, Hanson’s move was an unusual one for the company, which usually builds up stakes quietly and it might be planning a joint bid, analysts speculated.
A Hanson spokesman, who didn’t want to be identified by name, declined to comment on the takeover speculation. Hanson announced the stake, which wasn’t required to be disclosed under British law because it was under 3 percent, at ICI’s request, the Hanson spokesman said.
An ICI spokeswoman declined to comment on whether the company considered Hanson’s approach hostile or friendly. She wasn’t identified in accordance with company practice.
Hanson didn’t specify in its briefly worded statement the price it paid for the 20 million ICI shares. Investment firm Smith New Court PLC bought the shares Tuesday on behalf of a then-unidentified client.
Smith New Court offered to buy shares at 11.67 pounds, or $20.42, each. At that price the Hanson stake cost 233 million pounds, $408 million, and all of ICI would be worth 8.26 billion pounds, $14.46 billion.
ICI’s shares surged 60 pence to 12.18 pounds as 7.6 million shares changed hands.
Analysts estimated that ICI’s takeover would cost up to 11 billion pounds, $19.3 billion, putting it just behind Sir James Goldsmith’s failed 13.4 billion-pound bid for the conglomerate BAT Industries PLC, Britain’s largest takeover attempt.
An offer for ICI would be the first big takeover since the BAT takeover fight in 1989.
Geoff Allum, analyst at the investment firm County Natwest, said Hanson Chairman Lord Hanson was ″more likely to bid (for ICI) than not.
″I think he has an eye for value and he knows ICI is at its cyclical low point and he perceives value there.″
Nigel Utley, analyst at investment firm CL-Laing and Cruickshank, said the logic for Hanson would be to sell off the ICI pieces that are more appealing to other companies.
Hanson said when the company announced its half-year results on Tuesday that it continued to ″evaluate individual acquisition opportunities″ although share prices seemed high in light of depressed earnings.
The company said it is in position to ″capitalize on selective opportunities as they arise.″
In its latest big acquisition, Hanson last autumn bought 85 percent of Cavenham Forest Industries, the U.S. timber group, for $1.11 billion and sold its 49 percent stake in Newmont Mining Corp. to Cavenham’s owners for $1.3 billion. Hanson expects to buy the rest of the timber company for $189 million in August.
Last July, Hanson paid $1.2 billion for full control of Peabody Coal, the largest U.S. coal producer.
Its other U.S. interests include SCM chemicals.