AkzoNobel, the global paints and coatings giant and ultimate holding company of ICI Pakistan Limited (ICI-Pak), has decided to de-merge its paints business in Pakistan. Furthermore, following the completion of the proposed de-merger the AkzoNobel also intends to divest its shareholding in ICI-Pakistan. The decision on the de-merger scheme came in the shape of a proposal from the Netherlands-based management of AkzoNobel after the 59th Annual General Meeting of the company.
“The proposal envisages separation of the paints business into a separate legal entity (called Akzo Nobel Pakistan Limited) through a scheme of de-merger,” ICI-Pakistan informed the company’s shareholders at Karachi, Lahore and Islamabad stock exchanges and the Securities and Exchange Commission of Pakistan on Friday. Contingent upon the approval of ICI-Pakistan’s board of directors, its shareholders and the High Court of Sindh, the proposed de-merger is aimed at restructuring the AkzoNobel’s interest in ICI-Pakistan.
The global paints giant, also a major producer of specialty chemicals, has informed the ICI Board of Directors that after conducting a strategic review of its business in Pakistan, it had come to the conclusion that ICI-Pakistan’s paints business was offering ‘clear’ commercial benefits for the AkzoNobel. It also pointed out that the business had sufficient opportunity to create value within its transformed portfolio and future strategic ambitions. While the remainder of ICI-Pakistan’s portfolio is made up of robust and promising businesses with a strong end professional management team they are not aligned with AkzoNobel’s transformed portfolio and future strategic ambitions,” AkzoNobel also informed the ICI board. Therefore, the ultimate holding company said, in the better interest of ICI-Pakistan, AkzoNobel would divest its shareholding in the former after completion of the proposed de-merger.
The move is envisaged as enabling AkzoNobel to exploit growth and tap the full potential of its diverse and strong portfolio. “The board of ICI-Pakistan has agreed to deliberate on this proposal and a subsequent announcement shall be made once the board has reached a final decision,” ICI-Pakistan told the shareholders.
Meanwhile, the board, after its recent election on April 27, met on Friday and unanimously appointed MJ Jaffer as Chairman and Waqar A Malik as Chief Executive of the firm for a three-year tenure ending on April 28, 2014. The newly elected board also appointed sub-committees. A statement issued by ICI-Pakistan also confirmed the proposal on de-merger of the AkzoNobel’s paints business in Pakistan.
AkzoNoble should have adopted this strategy from the very beginning they entered in to business in Pakistan for their obvious unique position in paints / coatings business and not in other chemical and petrochemical derivatives like polyester /soda ash as it was the sole domain of ICI and hence of ICI Pakistan.
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