There has been speculation in the UK and international financial press that Cookson plc is planning to spin-off its electronics division, which is the world’s largest producer of solders. The story first appeared in the Sunday Times newspaper at the weekend, although the group has declined to comment on it. The division, recently re-named as Performance Materials, had sales of UK£814 million in 2011, accounting for some 29% of total group sales. The group also includes a significantly larger ceramics business and a smaller precious metals division which it is already in the process of divesting.
Performance Materials includes both solders and related products in its Joining Technologies unit and plating chemicals in the Surface Chemistries part of the business. Joining Technologies sales rose by 17% to £527 million last year, but almost all of the increase was due to higher tin and silver prices. Underlying sales excluding raw materials costs grew by only 1%, with an 8% volume increase in solder paste largely offset by a 14% fall in bar solders. Cookson, which trades mainly under the Alpha brand, also reported strong growth in its recycling business in the USA and China and opened a new solder plant in Manaus, Brazil at the end of last year.
It appears that the proposed de-merger may be being promoted by activist investment funds which hold a significant shareholding in the 300 years old company. Cookson recently appointed the Rothschild investment bank to assist in a review of its strategic options.
