A Battle of Giants

From far off, British business may seem a genteel affair, but not when titans clash. Last week aggressive, research-minded Imperial Chemical Industries Ltd. (annual sales: $1.6 billion) began the biggest takeover struggle in Britain's history. It broke off coolly polite merger talks with slow-footed Courtaulds, Ltd. (sales: $481 million), Britain's biggest maker of artificial fibers. Faced with stubborn resistance from Courtaulds' board, which is reluctant to be swallowed up, I.C.I, declared a proxy war, publicly offered to swap $560 million worth of its stock for all of Cour taulds' outstanding shares.

Mastermind of the takeover attempt is smooth-talking I.C.I. Chairman Stanley Paul Chambers, 57, rated by some as Britain's ablest executive. Defeat would spell a sorry setback for ambitious Chambers, but he obviously counts on winning.

Behind Victorian Walls. I.C.I, for four months secretly wooed Courtaulds before news of the merger negotiations leaked from behind I.C.I.'s massive Victorian walls six weeks ago. Since then talks have followed a tortuous path as the two bargained for advantage.

Last month I.C.I, offered to trade stock worth $504 million for all the Courtaulds' shares, called that bid "final, final." But Courtaulds' directors objected that the bid undervalued their company. To win stockholder support, Courtaulds reported that its long-sagging sales had surged at the close of 1961, announced that recently reduced dividends would be restored to the regular rate. I.C.I, countered by reporting a rise in its own sales and profits, said a merger would produce a further fattening of dividends. When this prospect failed to move Courtaulds' directors, I.C.I, offered to pay $56 million more for Courtaulds, or about $6.49 for every Courtaulds share. Last week Courtaulds' directors turned down even that bid, and I.C.I, took it to the public. To Courtaulds' shareowners--who saw the value of their holdings drop almost in half last year and then rebound to $5.60 after I.C.I.'s opening bid--the offer may well prove irresistible.

If 90% accept the I.C.I, terms, the ensuing takeover will create the tenth largest industrial complex in the world and the second largest outside the U.S.,* with assets of $3 billion, 162,000 employees in Britain and more than 52,000 abroad. The combined company would control some 25% of Britain's production of paint, more than 50% of its plastic film, and 90% of its output of man-made fibers. Overseas the firm would do business through a maze of satellites in 40 countries, including a $10 million Courtaulds viscose plant near Mobile, Ala., chemical companies in six South American and twelve Asian countries. Presiding over it all would be I.C.I.'s Chambers, a wine merchant's son who was educated at the London School of Economics.

Nothing Parochial. In the U.S., trustbusters would bar the creation of such a colossus. But Chambers expects no trouble from the easy British antimonopoly laws. He argues that the takeover, which would give I.C.I, a full range of synthetic fibers to compete with its two top foreign rivals, Du Pont and France's Rhone-Poulenc/ Rhodiaceta, is primarily designed to sharpen Britain's competitive position in the Common Market. Says Chambers: "We are fighting on a world scale. We cannot be parochial about it."

*Bigger: Royal Dutch/Shell.

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