IPO to ICI

12 March 2007 By Una Galani Follow @ugalani

The US drugs group is paying E11bn for Organon Biosciences that’s well above what Azko’s pharma unit was expected to fetch in an IPO. The deal just about stacks up financially for Schering. Meanwhile Akzo now has the firepower to bid for ICI.

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Dutch chemical group Akzo Nobel announced on Monday the sale of its pharmaceutical unit Organon Biosciences to ScheringPlough for E11bn cash, dropping plans for an initial public offering. Shareholders approved the separation in September 2006.

Organon Biosciences develops and markets prescription drugs, and also includes veterinary health unit Intervet. The group had annual sales of E3.7bn in 2006. The human drug business generated E483m ebitda, and the animal health unit E271m ebitda. After the deal, the new company will represent the world's number one animal health business.

The proceeds will be used to launch a 10% share buyback, equivalent to E1.3bn, based on Friday's closing share price, and reduce Akzo's UK pension liabilities. Analysts have speculated the proceeds from the floatation of Organon could be used by Akzo to mount a takeover bid for UK paint company ICI. Hans Wijers, chief executive of Akzo Nobel, declined to comment.

Akzo shares rose 17% on news of the deal, ICI shares rose up to 6%.

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