The transformation of ICI
An ICI case study

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Page 5: Financing the new strategy

A key component of any strategy involves outlining the major resource decisions required to put the strategy in place. In order to acquire new businesses, ICI has had to sell some of its existing businesses e.g. ICI has sold its polyester polymers and non-US titanium dioxide businesses to DuPont for a staggering £1.8 billion. Between 1997 and the year 2000, ICI is expected to raise over £4 billion by selling its non-core businesses.

Ici 4 Image 3ICI has been able to use the funds it has been generating to invest intelligently in areas of the sensory perception market in which it has a competitive advantage. For example, although ICI is world leader in decorative paints, it currently only has 10% of this market. ICI has therefore recently acquired Grow in the USA, Bunge paints in South America and Williams in Europe.

ICI has also looked to bank borrowing to finance its expansion. The acquisition of Unilever’s Speciality Chemicals businesses was financed entirely through a five year bank loan. ICI's financial director has set a target to reduce dependence on borrowing and to make a return of investment on its new businesses of 20%. Clearly this is a demanding target but is a necessary requirement if ICI is going to transform itself from a less profitable producer of bulk chemicals to a producer of attractive consumer focused products.

ICI | The transformation of ICI