Elementis to sell pigments arm to RSW for £70m

ELEMENTIS, the producer of chromium chemicals, yesterday agreed to sell its UB-based pigments arm to Rockwood Specialties Group for $140 million (£70m) in cash, pushing its shares sharply higher.

Elementis, which carried out a strategic review last year to boost earnings, said the sale of the synthetic iron oxides producing business was in line with its aim of focusing on speciality businesses.

It added: "Net proceeds from the sale will initially be used to reduce net borrowings, but the board is reviewing other potential uses and will provide an update before completion."

The firm expects to record a pre-tax gain of 20m and said the transaction, due for completion before the end of 2007, would have no material impact on the group's earnings before exceptional items.

The Global Pigments unit reported 6.1m in operating profit before exceptionals on sales of 94.2m in 2006.

Shares in Elementis closed 8.25p, or 10 per cent, higher at 89.75p, valuing the business at around 397m.

Chief executive David Dutro added: "This transaction confirms the success of our restructuring initiatives in the pigments division, which has delivered steadily improving results in a highly competitive environment."