Engineering and plastics group Barlo announced yesterday that it had sold its British-based subsidiary, Stanley Smith, for €6.7 million (£5.28 million), below its book value of €7.1 million.

But Mr Tony Mullins, managing director, said at the company's annual meeting, it would make a profit on the overall sale when the value of the retained site at Isleworth in London was taken into account.

It has a book value of €2.2 million but its current market value is at least twice that, he says.

"This is part of a gradual refocus for the company over the last number of years and the proceeds from the sale will be reinvested into our core businesses," he added.

"The pace of consolidation in the euro zone, which is being driven by the common currency, will be quicker than many expect, and companies need to consolidate to succeed in this market."

The company is looking at several possible acquisitions around Europe over the coming year.

It recently announced pre-tax profits of €18 million for the year to March 1999, up 67 per cent on 1998 levels.

The two-stage sale of Stanley Smith to an English subsidiary of Klockner Pentaplast GmbH, the German plastics company, includes the trade of the company, its trade name and all of its net assets except the site from which it operates.

Barlo chairman Mr Niall Carroll said the strong performance of the company had continued into the first quarter of 1999 with operating profits ahead of plan and considerably ahead of the comparative period in 1998.

"This sale marks the latest phase in the disposal of certain of the activities and assets of IRG plc since it was purchased in 1992."