A letter to the City Editor of the Daily Telegraph which was published on 25th June 2007.

As someone also with a long asociation with ICI, I do not agree with Dr John Thornton (June 18th) that the demise of ICI is inevitable for the reasons he gives, though on current indications I agree that it is likely.

The fact is that ICI, like Pilkington a year or two back, is being threatened with takeover because it is a success.  Most takeovers, with some exceptions, destroy value because predators bid up the share price to levels which fund managers, who rarely have any long-term interest in the company, will acept.  Two or three years after a successful bid, the predator companies almost invariably find they have overpaid and attempt to recoup their expenditure by sacking staff, closing factories, and transferring the brands they acquired to other facilities.  Both sets of management, the predator and the taken-over, come out with millions paid for by those job losses and the value destroyed.

With the volume of money around, every single British company can be acquired by foreign interests.  At the present rate of takeovers, pension funds will soon have no British FTSE companies to invest in.  Is that what they want?  ICI is a test case.  The company is paying a decent dividend, now has a strong balance sheet, providing a good basis to grow and enhance its long-term value to the benefit of the pension funds invested in it.  Why don’t they give it a chance to do just that?