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Note 2 Acquisitions and divestments


On January 2, 2008, we acquired 100 percent of the share capital of Imperial Chemical Industries plc (ICI). The total cost of the acquisition, paid mostly in cash, was €11.6 billion. ICI was one of the world’s leading coatings, adhesives, starches and synthetic polymer businesses, with products and ingredients developed for a wide range of markets. It had operations in more than 50 countries around the world and its customers are spread across a diverse range of product sectors.

Additionally, in Performance Coatings we acquired Enviroline, a specialist supplier of corrosion-resistant linings, predominantly for the oil and gas industries. We acquired our floor coatings portfolio through an acquisition from Lord Corporation. In Specialty Chemicals we acquired Levasil, a silica sol business. These acquisitions in 2008, both individually and in total, were deemed immaterial in respect of the IFRS 3 disclosure requirements.

Acquisition of ICI

 

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In € millions

Pre-acquisition carrying amounts

Recognized values at acquisition

 

 

 

Goodwill

413

4,465

Other intangible assets

61

3,763

Property, plant and equipment

1,135

1,382

Other non-current assets

545

513

Inventories

568

622

Trade and other receivables

977

979

Assets held for sale

1,200

4,413

Cash and cash equivalents

1,088

1,088

Provisions

(1,271)

(1,402)

Deferred tax liabilities

(21)

(884)

Long-term borrowings

(372)

(372)

Trade and other payables

(1,915)

(1,940)

Liabilities held for sale

(554)

(581)

Net identifiable assets and liabilities

1,854

12,046

 

 

 

Minority interests

 

(435)

 

 

 

Consideration paid

 

11,611

Cash flows used for acquisitions

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In € millions

 

 

 

Consideration paid for ICI

11,611

Cash and cash equivalents acquired

(1,088)

Paid through loan notes

(142)

Paid in 2007

(349)

Other acquisitions

155

 

 

Cash flows used for acquisitions

10,187

The goodwill recognized is related to ICI’s workforce and the synergies expected to be achieved from integrating ICI into Decorative Paints and Specialty Chemicals. The major intangibles recognized are acquired brands, the most significant being Dulux. Several brands are expected to have an indefinite useful life. As a result, they will not be amortized but tested for impairment annually.

Other intangible assets acquired in ICI at acquisition date

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In € millions

Amount

Amortization period (in years)

 

 

 

Brands and trade names with indefinite useful life

1,929

Brands and trade names with finite useful life

410

31

Customer relationships

1,146

15

Other intangibles

278

13

 

 

 

Intangibles acquired

3,763

18

As the acquisition of ICI took place on January 2, 2008, our financial outcomes include the full year’s results from ICI. Due to the immediate integration, we cannot determine the amount that the acquisition contributed to operating income in 2008 on a stand alone basis. All other acquisitions in 2008 have made a marginal contribution to net income, even if all acquisitions had occurred on January 1, 2008.

In connection with the acquisition of ICI, we sold all assets and liabilities comprising the businesses known within ICI as the Adhesives business and the Electronic Materials business to Henkel, for €3.6 billion in cash after a pension settlement and before final settlement adjustments. The transaction took place in April 2008.

In addition, in granting clearance, the EU and Canadian authorities accepted a commitment package from AkzoNobel involving the divestment of a number of AkzoNobel Decorative Paints businesses in the UK, Ireland, Belgium and Canada. These businesses were sold in the course of 2008.

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