UNIDARE, the Finglas based engineering group, has agreed to sell, its plastics division for around £5 million, according to industry sources. A Unidare spokesman said he could make no comment.
The division is understood to have been purchased by a management buyout team. Details of the deal are expected to be announced later this week.
Unidare has been trying to sell the division for more than a year as part of a review of all its businesses. Thee group had been talking to a number of interested parties from Britain and continental Europe, but no deal has been concluded with these parties.
Unidare's plastic manufacturing plant which employs around 100 people is based in Portadown, Northern Ireland. The division also has distribution outlets in the Republic and Britain.
Unidare had planned to spend £5 million on the plastics business. However, it had always been considered a non core activity. The division is understood not, to have incurred losses, but it is in a very cyclical area. The cycle is now on a more positive trend.
Many companies in the plastics' business have, in the past, had bad experiences. They have had to contend with the cyclical cost of polymers. The Unidare experience, however, has been better. Much of its business has been by way of contracts which included material price variation clauses and these were recovered in the market.
As part of its restructuring plan, Unidare last year sold properties and a storage heating business for around £12 million. At a press briefing on the interim results in June, group chief executive, Mr Paul Duggan, said the sale was a good one. "We are focusing on core businesses. When you are offered a good price you."
Unidare produced poor interim results. These showed a fall in pre tax profit from £4.1 million to £3 million. This decline has been attributed to lower operating profits in its distribution businesses. Also, there was a fall in interest income in the first half.
Shareholders had been warned to expect lower profits. Chairman, Mr Jim Culliton, told them at the annual meeting that pretax profits for the year to end September 1996 were likely to fall short of those achieved last year.
That disappointed the market as the company had returned to profits last year with a pre tax profit of £8.1 million which contrasted with the loss of £1.5 million in the previous year.
That led to brokers downgrading their forecasts for this year. One problem area has been Nasco, the group's US distribution business which generated 45 per cent of profits last year. Mr Culliton said Nasco would fall short of its planned profit for the year. Nasco had been hit by tough competition. One major customer cut its prices and it took Nasco a while to react.
Despite the disposals, Unidare still intends to expand its business by acquisitions. It reckons that it has the capacity to spend around £20 million between now and the end of 1997. The preference is for larger acquisitions, generating at least £1 million operating profit. However, it is not ruling out smaller ones.
Unidare has always been adamant that it would not make acquisitions in the plastics area. The sale of the plastic business in the management buy out will therefore represent an exit from that business altogether.
