Orica Sells Pharmaceuticals Business

4th September, 1998

Orica Limited today announced that the sale of its Pharmaceuticals business to Zeneca has been completed for gross proceeds of $A328.5 million subject to working capital finalisation adjustments.

"Pharmaceuticals has been a very good business for Orica, however we are pleased to have obtained an excellent price which reflects the value we have built into the business," Orica managing director and CEO Philip Weickhardt said.

Last year the Pharmaceuticals business had sales of $A111 million and a trading profit of approximately $A26 million. The sale will generate an estimated abnormal profit after tax and separation costs of $A300 million.

These figures exclude the CardizemŽ range of pharmaceuticals products which was recently sold to Hoechst Marion Roussel Australia Ltd (HMR). These products, with annual sales of $30 million, were distributed by Orica under licence to HMR and were precluded from the business sale to Zeneca. The sale price was not disclosed.

All employees will transfer to Zeneca.

The proceeds from this sale will be initially used to retire debt and will provide further capacity for new investment in core businesses and to contribute to the ongoing growth of the Orica group.

BACKGROUND INFORMATION

Last year Orica and Zeneca agreed to negotiate the sale of Orica’s pharmaceuticals business to Zeneca.

During negotiations agreement was not reached on the price that should be paid by Zeneca for the business. The Distribution Agreement between Orica and Zeneca set out a mechanism to determine a price to be paid for the pharmaceutical business which involved the appointment of independent valuers to value the business.

The process for an independent valuation commenced late last year. Differences emerged between Orica and Zeneca over the interpretation of certain provisions of the Distribution Agreement. As a result of actions taken by Zeneca, those matters were the subject of legal proceedings in the Chancery Division of the High Court in England.

Orders in the action instituted by Zeneca were made by the High Court in August and the valuation of the business has now been completed.