LONDON (CNNfn) - U.K. pharmaceuticals maker Zeneca joined the shake-up in the global chemicals industry Thursday when it put its specialties unit up for sale.
News of the proposed sale boosted Zeneca's shares to £22.80 each in London, a rise of 1 percent, after falling to £22.07 earlier in the day.
The unit has annual sales of about £800 million $1.328 billion), and analysts expect it to fetch a price of around £1.6 billion ($2.656 billion).
"The timing of the announcement is a surprise," admitted Desdner Kleinwort Benson analyst Peter McDougall, although he agreed it was a logical move.
He added: "Why keep a business with a 10 percent margin when your more important pharmaceutical activities generate margins of 28 percent?"
Other analysts said the sale could mean Zeneca is clearing the decks for a bigger deal with another pharmaceuticals company. Rumors of mergers with a larger pharmaceuticals company have swirled round Zeneca for a long time.
"Conditions in the chemicals industry are tough," said one analyst, "and we're at the top of the M&A cycle."
Zeneca's announcement comes only a few days after Swiss chemical giants Clariant and Ciba Specialty Chemicals agreed to merge in a $15 billion deal.
Zeneca told analysts it wants to sell the specialties unit in one go, although some observers say there is the possibility of a management buyout, or a piecemeal sale of the different parts.
Zeneca, the U.K.'s third-largest pharmaceuticals company, was spun off from ICI in 1993.
In 1997, the company reported annual sales of $8.6 billion.