Cookson buys chemicals firm for $503m

COOKSON GROUP, the industrial materials company, has bought Enthone- OMI, a speciality chemicals manufacturer, for $503m (pounds 310m) in cash in its biggest acquisition to date.

Enthone, which is being sold by Asarco, a subsidiary of Grupo Mexico, allows Cookson to plug a gap in the products it offers to makers of printed circuit boards, which are used by the electronics industry.

However, Cookson's shares dropped 15p to 220p on concern that the purchase is being financed by debt. Analysts said that the strategic logic of the move was good nevertheless.

Stephen Howard, chief executive of Cookson, said interest cover remained comfortable and that the company's debt would be reduced through the on- going disposals programme. The company has said it will focus on its core markets - electronics, ceramics and precious metals. Cookson is thought to be poised to sell its plastics business, to raise around pounds 150m. "Enthone will enable us to offer a full range of process chemicals, to add to our laminate products, for circuit boards," Mr Howard said.

Cookson said this sector of the electronics industry is forecast to grow at 7 to 8 per cent annually for the next five years.

Enthone, which will be merged with Cookson's Polyclad Technologies arm, also supplies semiconductor fabrication chemicals, as well as coatings to the electronics, automotive, aerospace and jewellery industries. These corrosion and wear- resistant coatings are not currently supplied by Cookson.

The business made an operating profit of $40m (pounds 25m) for the year ended 30 September, on sales on $404m. Its net asset value was $161m. Cookson said the acquisition would be earnings enhancing in 2001 and would produce annual savings of $20m from that year.

Asarco was bought by metals producer Grupo Mexico last month for $2.25bn (pounds 1.4 bn).