Tessenderlo announced to have closed the earlier announced sale of its pharmaceutical ingredients business, comprising of two production sites in France and Italy with about 360 employees. The buyer is the private industrial holding company International Chemical Investors Group (ICIG).
Our View:
The pharmaceutical ingredients activities was part of the Others division and generated about € 70-75m annual revenue. Tessenderlo does not disclose the profitability level of the various business units within the Others division but commented before that this business unit has been in a loss and even cash drain situation in the past few years.
Tessenderlo already took an € 29.5m impairment and € 5.6m additional costs to sell and other provisions in its 3Q12 results related to this operation.
The closing of the transaction is no surprise as the deal was already announced earlier although it is another step in the strategic conversion of Tessenderlo towards a more specialty oriented company, built around Tessenderlo Kerley and the Gelatin & Akiolis divisions. As with some of the other steps taken (like the divestments of PVC/Chloralkali and the continental European profiles business), the sale is a step in the right strategic direction but however not a value creating move in itself (given the significant impairment). We stick to our Accumulate rating and € 26 target price