Imperial Chemical Industries

Imperial Chemical Industries plc
Public limited company
IndustryChemicals
FateAcquired by AkzoNobel
PredecessorKynoch, United Alkali Company Edit this on Wikidata
Founded1926; 94 years ago (1926)
Defunct2008; 12 years ago (2008)
HeadquartersLondon, England, UK
Key people
Alfred Mond (first CEO)
Sir Paul Chambers
Sir John Harvey-Jones
ProductsPaints & speciality chemicals
Revenue£4.85 billion (2006)
£502 million (2006)

Imperial Chemical Industries (ICI) was a British chemical company. It was, for much of its history, the largest manufacturer in Britain.[1]It was formed by the merger of four leading British chemical companies in 1926.Its headquarters were at Millbank in London. ICI was a constituent of the FT 30 and later the FTSE 100 indices.

ICI made paints and speciality products, including food ingredients, speciality polymers, electronic materials, fragrances and flavourings.In 2008, it was acquired by AkzoNobel,[2]which immediately sold parts of ICI to Henkel, and integrated ICI's remaining operations within its existing organisation.[3]

History

Development of the business (1926–44)

1930s volumes of ICI magazine

The company was founded in December 1926 from the merger of four companies: Brunner Mond, Nobel Explosives, the United Alkali Company, and British Dyestuffs Corporation.[4] It established its head office at Millbank in London in 1928.[4] Competing with DuPont and IG Farben, the new company produced chemicals, explosives, fertilisers, insecticides, dyestuffs, non-ferrous metals, and paints.[4] In its first year turnover was £27 million.[4]

In the 1920s and 30s, the company played a key role in the development of new chemical products, including the dyestuff phthalocyanine (1929), the acrylic plastic Perspex (1932),[4] Dulux paints (1932, co-developed with DuPont),[4] polyethylene (1937),[4] and polyethylene terephthalate fibre known as Terylene (1941).[4] In 1940, ICI started British Nylon Spinners as a joint venture with Courtaulds.[5][6]

ICI also owned the Sunbeam motorcycle business, which had come with Nobel Industries, and continued to build motorcycles until 1937.[7]

During the Second World War, ICI was involved with the United Kingdom's nuclear weapons programme codenamed Tube Alloys.[8]

Postwar innovation (1945–90)

Map showing Imperial Chemical Industries sales regions, offices and factories in the United Kingdom in May 1955

In the 1940s and 50s, the company established its pharmaceutical business and developed a number of key products, including Paludrine (1940s, an anti-malarial drug),[4] halothane (1951, an anaesthetic agent), Inderal (1965, a beta-blocker),[4] tamoxifen (1978, a frequently used drug for breast cancer),[9] and PEEK (1979, a high performance thermoplastic).[4] ICI formed ICI Pharmaceuticals in 1957.

ICI developed a fabric in the 1950s known as Crimplene, a thick polyester yarn used to make a fabric of the same name. The resulting cloth is heavy and wrinkle-resistant, and retains its shape well. The California-based fashion designer Edith Flagg was the first to import this fabric from Britain to the USA. During the first two years, ICI gave Flagg a large advertising budget to popularise the fabric across America.

In 1960, Paul Chambers became the first chairman appointed from outside the company.[10] Chambers employed the consultancy firm McKinsey to help with reorganising the company.[10] His eight-year tenure saw export sales double, but his reputation was severely damaged by a failed takeover bid for Courtaulds in 1961–62.[10] In 1962, ICI developed the controversial herbicide, paraquat.

ICI was confronted with the nationalisation of its operations in Burma on 1 August 1962 as a consequence of the military coup.[11]

In 1964, ICI acquired British Nylon Spinners (BNS), the company it had jointly set up in 1940 with Courtaulds. ICI surrendered its 37.5 per cent holding in Courtaulds and paid Courtaulds £2 million a year for five years, "to take account of the future development expenditure of Courtaulds in the nylon field." In return, Courtaulds transferred to ICI their 50 per cent holding in BNS.[12] BNS was absorbed into ICI's existing polyester operation, ICI Fibres. The acquisition included BNS production plants in Pontypool, Gloucester and Doncaster, together with research and development in Pontypool. Early pesticide development included Gramoxone (1962, a herbicide),[4] the insecticides pirimiphos-methyl in 1967 and pirimicarb in 1970, brodifacoum (a rodenticide) was developed in 1974; in the late 1970s, ICI was involved in the early development of synthetic pyrethroid insecticides such as lambda-cyhalothrin.

Peter Allen was appointed chairman between 1968 and 1971.[13] He presided over the purchase of Viyella.[13] Profits shrank under his tenure.[13] During his tenure, ICI created the wholly owned subsidiary Cleveland Potash Ltd, for the construction of Boulby Mine in Redcar and Cleveland, North Yorkshire. The first shaft was dug in 1968, with full production from 1976. ICI jointly owned the mine with Anglo American, and then with De Beers, before complete ownership was transferred to Israel Chemicals Ltd in 2002.

Jack Callard was appointed chairman from 1971 to 1975.[14] He almost doubled company profits between 1972 and 1974, and made ICI Britain's largest exporter.[14] In 1971, the company acquired Atlas Chemical Industries Inc., a major American competitor.[4]

In 1977, Imperial Metal Industries was divested as an independent quoted company.[15] From 1982 to 1987, the company was led by the charismatic John Harvey-Jones.[16] Under his leadership, the company acquired the Beatrice Chemical Division in 1985 and Glidden Coatings & Resins, a leading paints business, in 1986.[17]

Reorganisation of the business (1991–2007)

In 1991, ICI sold the agricultural and merchandising operations of BritAg and Scottish Agricultural Industries to Norsk Hydro,[18] and fought off a hostile takeover bid from Hanson, who had acquired 2.8 percent of the company.[19] It also divested its soda ash products arm to Brunner Mond, ending an association with the trade that had existed since the company's inception, one that had been inherited from the original Brunner, Mond & Co. Ltd.

In 1992, the company sold its nylon business to DuPont.[20] In 1993, the company de-merged its pharmaceutical bio-science businesses: pharmaceuticals, agrochemicals, specialities, seeds and biological products were all transferred into a new and independent company called Zeneca.[21] Zeneca subsequently merged with Astra AB to form AstraZeneca.[22]

Charles Miller Smith was appointed CEO in 1994, one of the few times that someone from outside ICI had been appointed to lead the company, Smith having previously been a director at Unilever. Shortly afterwards, the company acquired a number of former Unilever businesses in an attempt to move away from its historical reliance on commodity chemicals. In 1995, ICI acquired the American paint company Grow Group.[23] In 1997, ICI acquired National Starch & Chemical, Quest International, Unichema, and Crosfield, the speciality chemicals businesses of Unilever for $8 billion.[24] This step was part of a strategy to move away from cyclical bulk chemicals and to progress up the value chain to become a higher growth, higher margin business.[4] Later that year it went on to buy Rutz & Huber, a Swiss paints business.[25]

Having taken on some £4 billion of debt to finance these acquisitions, the company had to sell off its commodity chemicals businesses:

  • Disposals of bulk chemicals businesses at that time included the sale of its Australian subsidiary, ICI Australia, for £1 billion in 1997,[26] and of its polyester chemicals business to DuPont for $3 billion also in 1997.[27]
  • In 1998, it sold Crosfield to WR Grace and bought Acheson Industries Inc., an electronic chemicals business.[28][29]
  • In 2000, ICI sold its diisocyanate, advanced materials, and speciality chemicals businesses at Teesside and worldwide (including plants at Rozenburg in the Netherlands, and South Africa, Malaysia and Taiwan), and Tioxide, its titanium dioxide subsidiary, to Huntsman Corporation for £1.7 billion.[30] It also sold the last of its industrial chemicals businesses to Ineos for £300 million.[31]
  • In 2002, the ICE wholly transferred ownership of Boulby Mine to Israel Chemicals Ltd.[32]
  • In 2006, the Company sold Quest International, its flavours and fragrances business, to Givaudan, for £1.2 billion[33] and Uniqema, its oleochemical business, to Croda International, for £410 million.[34]

Having sold much of its historically profitable commodities businesses, and many of the new speciality businesses which it had failed to integrate, the company consisted mainly of the Dulux paints business, which quickly found itself the subject of a takeover by AkzoNobel.

Takeover by AkzoNobel

A former ICI plant in Huddersfield, West Yorkshire, now owned by Syngenta.

Dutch firm AkzoNobel (owner of Crown Berger paints) bid £7.2 billion (€10.66 billion or $14.5 billion) 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.[35] 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 AkzoNobel. In the UK, any combined operation without divestments would have seen AkzoNobel have a 54 per cent market share in the paint market.[36] The initial bid was rejected by the ICI board and the majority of shareholders.[37] However, a subsequent bid for £8 billion (€11.82 billion) was accepted by ICI in August 2007, pending approval by regulators.[38]

At 8 a.m. on 2 January 2008, completion of the takeover of ICI plc by AkzoNobel was announced.[2] Shareholders of ICI received either £6.70 in cash or AkzoNobel loan notes to the value of £6.70 per one nominal ICI share. The adhesives business of ICI was transferred to Henkel as a result of the deal,[39] while AkzoNobel agreed to sell its Crown Paints subsidiary to satisfy the concerns of the European Commissioner for Competition.[40] The areas of concern regarding the ICI UK pension scheme were addressed by ICI and AkzoNobel.[41]