Croda International has struck a deal to sell most of its performance technologies and industrial chemicals divisions to US food processing giant Cargill for £778million.
The sale comes as Croda shifts its focus towards the life science and consumer care sectors, which together accounted for more than 90 per cent of its profits in 2020.
Shares in the Yorkshire firm have shot up around 48 per cent this year, helped by its supply of lipids for Pfizer’s Covid jabs.
Croda is shifting its focus towards the life science and consumer care sectors, which together accounted for more than 90% of its profits in 2020
The FTSE 100 firm will reinvest the cash in ‘faster growth areas’, increasing its exposure to the healthcare sector and developing a position in consumer markets.
The divisions it is selling make ingredients for coatings, sealants and adhesives used in businesses such as the car industry.
It has decided to sell 77 per cent of the two divisions following a strategic review. Cargill will take control of five manufacturing facilities including Croda’s plant in Hull as well as a factory in the Netherlands.
Cargill will also take on a joint venture in China, in which Croda owns a 65 per cent stake, and several laboratories.
The assets being sold raked in £361million in revenues in 2020, around 26 per cent of Croda’s total that year.
It is not the first time the companies have done a deal, with Croda having sold a rapeseed oil extraction plant in Hull to Cargill in 1985.
Chief executive Steve Foots said the sale will lead to consistent sales growth and stronger profits. Cargill said that it will gain nearly 1,000 employees.
Croda shares dipped 0.4 per cent, or 38p, to 9942p.
Hargreaves Lansdown analyst Susannah Streeter said a sale ‘had been on the cards’ during the strategic review and, as a result, the fall in the share price may have been the result of some investors being ‘disappointed’ by the final price tag.
But the drop barely made a dent in its strong performance over 2021. It has cashed in on soaring demand for booster jabs as countries try to control infection rates.
A rebound in consumer spending following lockdown has also helped Croda’s personal care division, which supplies ingredients used to make skin, hair and cosmetic products.
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