China crisis as ECC falls to French firm
15 Jan 2000
Cornwall-based minerals and specialities company English China Clays has accepted a £756million takeover bid from Imetal, a French conglomerate based around metal and mineral processing interests. ECC is now likely to be broken up.
ECC produces kaolin, which is used as a paper whitener, and calcium carbonate, used in ceramics. It also has a specialities arm, Calgon, which produces water treatment chemicals. Imetal, meanwhile, mines, processes and markets minerals, and already holds a substantial proportion of the world kaolin market, including a US business which it bought from ECC. Combining the two groups gives Imetal control of about a third of the kaolin market. The Federal Trade Commission will be examining the deal under anti-trust laws; European and Canadian authorities will also examine it.
Imetal originally issued a £680million offer in January, saying that ECC's growth prospects were unimpressive; the UK firm countered that the bid was `opportunistic' and that the company had an independent future. It took an 11 per cent hike in the bid to change the ECC board's minds; they now believe the offer represents `a good deal for shareholders.' The City seemed to disagree, however; ECC shares fell on the news.
Imetal does not have any kaolin interests in Europe, but has warned ECC's 3000 Cornish workers that the business must remain competitive. The French firm - which is controlled by a Belgian financier, Baron Albert Fre're - has already indicated that it does not consider the specialities arm of ECC a good fit with the minerals interests, and it is likely to be divested.
