Akzo proposal to acquire ici

As I am sure you aware, in situations like this, not all details are known until after the deal closes.  Let me try to provide you the facts and add some reasonable speculation on the impact of the Akzo acquisition of ICI on Elotex.

First, the scope of the deal and the timing:

Akzo's offer is to buy ICI including all of National Starch & Chemical. Both Akzo's and ICI's shareholders must vote to approve the deal. We expect it to be approved but the results will not be official until November 6. Competition authorities in Canada, the EU and US must also give their consent. While some pieces of the Paints businesses in Europe will probably need to be divested, the acquisition is expected to go through the regulatory/anti-trust process. If everything goes as expected, the deal will close on January 2, 2008. Once that deal closes, Akzo has already prearranged to sell National's Adhesives and Electronic Materials businesses to Henkel.

Second, the impact on Elotex:

This past week, Akzo disclosed to shareholders that it is their intent to keep National's Specialty Polymers business but to find a buyer for the Natural Polymers (Specialty Starch) business. Here is an excerpt from their comments:

“Specialty Polymers, on the other hand, is a business which management believes could fit with Akzo Nobel’s Chemicals activities and offer potential for value creation,” the company stated in the circular, which continued: It has "an excellent performance record and continues to grow and develop well.”  

Elotex is part of the Specialty Polymers business so we will stay with Akzo after the deal closes.

There are many uncertainties but we believe that Elotex will not only be retained by Akzo but they will encourage our growth. Since there is essentially no overlap in our businesses, we do not expect any short term changes in our organization. We continue to implement our strategic plans and will continue to do so after the deal closes. As an example, I just returned from China where I attended the ground breaking of the new redispersible powders plant that we will build in Shanghai. We are moving forward and expect the plant to be operational by Q4 2008.  

So, while there are no guarantees, it is business as usual at Elotex.  We will keep you informed as more information becomes available.

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