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Thursday, November 12, 1998 Published at 16:32 GMT

Business: The Company File

Zeneca mulls specialities sale

British drug giant Zeneca has said it is considering selling off its specialities business.

Zeneca Specialties includes biocides, industrial colours, lifescience molecules, performance and intermediate chemicals and resins.

The company said the move would offer the business additional growth opportunities in the rapidly expanding speciality chemicals sector.

Chief executive David Barnes said the sale could be completed in the first quarter of next year.

"I would hope that we would have completed the deal in quarter one...It's not likely that we will be making any announcement before the turn of the year," he said.

[ image: Zeneca's agrochemicals business is not for sale]
Zeneca's agrochemicals business is not for sale
The business operates across 35 sites worldwide and employs about 5,500 people.

It accounted for £434m ($719.5m) of Zeneca's total first half sales of £2.9bn.

Zeneca said that its Marlow Foods business would not be included in any sale.

Its northern England Huddersfield works, excluding dedicated specialities' plants, and the company's agrochemicals plants at Grangemouth in Scotland will also remain with Zeneca.

Shares in the company were trading 25p higher at 2280p after moving in negative territory ahead of the statement.

Analysts welcome sale

Analysts pointed out that the sale did not include Zeneca's agrochemicals operations, still seen as a growth area.

However they welcomed the sale as a move out of a relatively low-margin business and as providing Zeneca with a useful cash boost.

Analysts said they expected the businesses to fetch double their sales of around £800m - a sale price of £1.6bn.

Some also said the move would make Zeneca more attractive as a possible merger partner.

Jeremy Scudamore, chief executive of Zeneca Specialties, said he expected the business to fetch a good price but would not comment on analyst predictions.

"This is not a fire sale. This is an extremely high quality group of businesses which will enhance any of the reputable first division leaders in specialty chemicals," he said.

"We're not interested in people who want to break it up or people who want to cherry-pick," he added.

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