In a buy-out estimated at €250 million, Danish company Danisco will take on board the cultures, hydrocolloid and food safety product operations of Rhodia's ingredients business that generated around €211million in sales in 2003.
The announcement on Friday confirms months of speculation that married Rhodia with a host of suitors, including DSM and Danisco. Speculation intensified in December when the French firm confirmed that it planned to divest €700 million in non-core assets in 2004 to slice away its heavy debt, blazing at €2.3 billion in 2003.
Terms of the agreement were not agreed but Rhodia said that the group expects the deal - that concerns over 800 jobs - to go ahead by the end of the second quarter 'after consultations have been held with employee representatives and legal authorisations [from competition authorities] received'.
"The divestiture marks the first step in Rhodia's plans to re-focus its business portfolio and will contribute significantly to debt reduction," the company said, confirming that it intends to complete a €700 million sale of assets in 2004.
Rhodia reported its audited results for 2003 on the same day as it announced the sale. Net sales came in at €5.453 billion, down 17.6 per cent year-on-year, with the decline split roughly equally from divestments and the effect of the weak US dollar.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at €364 million compared to €798 million in 2002. Eighty per cent of this decline was from the impact of higher raw material prices with the remainder due to lower volumes and additional restructuring charges, said the firm.
Rhodia's pharmaceuticals and agrochemicals division experienced a substantial decline in its business, with a decrease in volumes resulting from the postponed launch of new pharmaceuticals, expected since July 2002, for which the Pharma Solutions Enterprise supplies intermediates. The unit was also hit by a general weakening in demand for products of the perfumery, performance chemicals and agrochemicals segments.