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Imperial Chemical Industries

Imperial Chemical Industries (ICI) is a British chemical subsidiary of a Dutch conglomerate and one of the largest chemical producers in the world. It is based in Slough, UK. It produces paints and speciality products (including ingredients for foods, specialty polymers, electronic materials, fragrances and flavours). It employs around 29,000 people and had a turnover of just over £4.8 billion in 2006. Since January 2008, ICI has been a subsidiary of Dutch chemicals group Akzo Nobel, which is in the process of fully integrating the two companies.

History

Formation

ICI was founded in December 1926 from the merger of four companies—Brunner Mond, Nobel Explosives, the United Alkali Company, and British Dyestuffs Corporation.

Competing with DuPont and IG Farben (which was subsequently split up in 1952 into BASF, Agfa, Hoechst AG, Bayer and other companies), the new company produced explosives, fertilisers, insecticides, dyestuffs, industrial chemicals, printing materials, and paints. In its first year turnover was £27m.

Until 1937, the Sunbeam motorcycle business, which had come with Nobel Industries, was part of ICI.

Significant products

ICI played a key role in the development of new products, including the dyestuff phthalocyanine (1929), the acrylic plastic Perspex (1932), Dulux paints (1932, co-developed with DuPont), polyethylene (1937), Polyethylene terephthalate fibre known as Terylene (1941), sulfamethazine (the first sulfonamide antibiotic), paludrine (1940s, an anti-malarial drug), halothane (1951, an anaesthetic agent), Inderal (1965, a beta-blocker), brodifacoum (a rodenticide) in 1974, tamoxifen (1978, a frequently used drug for breast cancer), and PEEK (1979, a high performance thermoplastic). Because of their success in the pharmaceutical industry, ICI formed ICI Pharmaceuticals in 1957. The company is now part of the AstraZeneca group.

However, ICI made several mistakes in developing new materials, such as Biopol, a bioengineered plastic. Its properties were poor, and the cost of production very high, so the pilot plant on Teesside was closed in the early 1990's.

Main sites

ICI operated a number of chemical sites around the world. In the UK the main plants were situated at Billingham and Wilton (on Teesside) and Runcorn (in Cheshire). The Runcorn site was responsible for the development of the HiGEE and Spinning Disc Reactor concepts which were developed by Prof Colin Ramshaw, which lead to the concept of Process Intensification. Research into these novel technologies is currently being pursued by the Process Intensification Group at Newcastle University

Unsuccessful Hanson takeover

In 1988, the company successfully fought off a hostile takeover bid from the Hanson plc conglomerate.

1990 demergers

In 1993 the company decided to demerge its chemical business from the pharmaceutical bioscience divisions. Pharmaceuticals, agrochemicals, specialities, seeds and biological products were placed into a new and independent company called Zeneca Group (which merged with Astra AB in 1999 to form AstraZeneca PLC, one of the largest pharmaceutical companies in the world). The company also moved away from bulk and industrial chemicals towards speciality chemicals during the 1990s in the hope of making its income less dependent on the business cycle, earning higher profit margins, and developing businesses with long term growth potential. However its financial performance so far in the 21st century has been erratic.

ICI sold its Australian subsidiary, ICI Australia, in 1997 and the following year the former subsidiary changed its name to Orica.

Akzo Nobel takeover

Dutch firm Akzo Nobel (owner of Crown Berger paints) bid £7.2 billion (€10.66 billion or $14.5 billion US) for ICI in June 2007. An area of concern about a potential deal was ICI's British pension fund, which had future liabilities of more than £9 billion at the time. Regulatory issues in the UK and other markets where Dulux and Crown Paints brands each have significant market share were also a cause for concern for the boards of ICI and Akzo Nobel. In the UK, any combined operation without divestments would have seen Akzo Nobel have a 54% market share in the paint market. The initial bid was rejected by the ICI board and the majority of shareholders. However, a subsequent bid for £8 billion (€11.82 billion) was accepted by ICI in August 2007, pending approval by regulators.

As of 8.00am on 2 January 2008 ICI PLC became a subsidiary of Akzo Nobel NV. Shareholders of ICI will receive either £6.70 in cash or Akzo Nobel loan notes to the value of £6.70 per 1 nominal ICI share. The adhesives business of ICI has been transferred to Henkel as a result of the deal, while Akzo has agreed to sell its Crown Paints subsidiary to satisfy the concerns of the European Commissioner for Competition.

The areas of concern regarding the ICI UK pension scheme have been addressed by ICI and Akzo.