Barlo, the engineering group, has acquired ICI Acrylics GmbH, a German plastics extrusion company, part of ICI Acrylics, a business unit of Imperial Chemical Industries (ICI), for up to €11 million (£8.66 million). It will become part of Barlo Plastics, the group's sheet plastic division. "This is an important step in the growth of Barlo Plastics within the clear plastic sheet business in Europe and represents significant progress for the group in this sector," said Dr Tony Mullins, Barlo's group chief executive. Barlo, he added, intends to be part of the consolidation of the plastics and radiator industries in Europe. With little borrowings - gearing was 6 per cent at the end of last year - it is in a strong position to participate in the consolidation.
ICI Acrylics is engaged in the production of extruded acrylic sheet and is based in Nischwitz, near Neipzig in eastern Germany. It employs 60 people. Barlo said the purchase will significantly enhance its output of acrylic sheet while also substantially increasing its customer base and cementing its strategic with ICI Acrylics. Barlo and ICI Acrylics have agreed that Barlo will manufacture Perspex XT branded acrylic sheet under licence for the continued servicing of ICI's customer base for the product. And Barlo said the two companies have entered into a number of agreements covering the provision of technology and development support and the exchange of technical resources. These arrangements, said Dr Mullins, are strategically or commercially beneficial to the group.
The acquisition should have a negligible impact on earnings this year. However, it is expected to be positive next year.
The consideration includes a payment of up to €2.6 million for the share capital and up to €8.4 million to discharge intercompany indebtedness to ICI. The final consideration will be based on the actual net assets and indebtedness but the maximum premium over net assets will be €1.5 million, according to Barlo. The latest ICI Acrylics results show a loss before tax of $1.9 million in 1998. This, however, reflects exceptional items which, if excluded, indicate an underlying break-even position. Barlo said the German company should show a profit in the first six months of this year.
