Ascot buys German chemical group for pounds 90m

SHARES IN Ascot, the industrial group, surged by 6 per cent yesterday following the announcement of the acquisition of the Haltermann Group, a German chemical group, for pounds 90m.

In a statement, Ascot said that the purchase "creates a world-leading business in the chemicals outsourcing market, which has attractive growth potential".

The company will fund the DM250m purchase through the issue of pounds 31m of shares, while the remainder will be paid in cash. The Haltermann board will retain more than half of the newly issued shares.

The acquisition of Haltermann, which last year reported a pre-tax profit of pounds 9.4m on a turnover of pounds 130m, will make Ascot the world's largest contract chemical processor, with 50 per cent market share in Europe, and 30 per cent in the US.

Contract chemical processing, the manufacture of small batches of specialist chemicals outsourced by bigger companies, is perceived by the City as a stable business.

"It is an excellent part of the industry to be in. You don't have anything like the cycles of the commodity chemical business, or even speciality chemicals," said one analyst.

Dresdner Kleinwort Benson, the house broker, upped its full-year pre- tax profit forecasts by 7 per cent. With a share price of 250p, many believe that the forward p/e ratio of 7.5 is too low.

Ascot is also expected to benefit from a joint venture with ChiroTech, which makes a chemical compound for Glaxo's new anti-Aids drug, Abacavir, due to be launched in January.