Still more,about Akzo Noble seeking to get the Tencel prize by merging
with Courtauld--------
Business View: Takeover where Courtauld 's Tencel is the real
Akzo Nobel prize
04/21/98
The Scotsman
Page 25
Copyright (C) 1998 The Scotsman; Source: World Reporter (TM)
AFTER all the uncertainties of the past few months, the Dutch takeover
bid for Courtaulds is probably the best available solution for shareholders
and the group's employees, of whom there are nearly 17,000
The chief executive, Gordon Campbell, effectively signalled open season
for predators in February when he announced his demerger proposals
and the group is, perhaps, fortunate in being able to negotiate terms.
The main danger was that there could have been an opportunistic bid for
the group's paints and sealants division, which would have left its historic
fibres operations out on a limb. In effect, Akzo Nobel is taking out the
sealant side, but will also take the fibres operations under its wing,
merging them with its own interests and nursing them to face life as
independent entities.
The Dutch say the move will enhance prospects for the fibres and
chemicals operations, and for their employees, while the board considers
options including a demerger of the business to existing shareholders.
Courtaulds' fibres operations have a proud history. They made a fortune
by producing black crepe for the funeral of Queen Victoria's consort,
Prince Albert, and were the first to produce a man-made fibre 1904. But
their plants in Britain, the United States and Germany have struggled to
face tough competition from cheaper Far East plants in the viscose
market ahead of the development of new products, including the
highly-rated Tencel fibre.
Akzo may have much the same problems, but its new fibres are at a more
advanced state of development and a merged business could face an
altogether more stable future. Tencel is a real prize, however, but needs
investment.(A Key point--Max)
Charles Brown, an analyst at Goldman Sachs, believes about half the
combined group will be involved in traditional, but profitable, lines and
another quarter will produce new generation growth products. That
would leave just a quarter of the business involved in the troubled viscose
sector.
'There are a number of other factors involved, including the level of debt
which Akzo may pass on to the fibres and chemicals business, but the
company should have a healthy future and will be in a position to take an
active part in any restructuring of the industry.'
Meantime, the deal looks good for the Dutch group's shareholders and
the merger is expected to be earnings-enhancing in its first year. ..IS.-
SCT
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