Belgian chemicals and plastics company Solvay SA has announced plans to acquire specialty chemical producer Rhodia SA in a deal valuing the French company at 3.4 billion euros ($4.8 billion).
Brussels-based Solvay is offering 31.60 euros for each Rhodia share in cash as part of a friendly deal. The new group will have sales of 12 billion euros.
“We have a shared vision in that we want to create a new group to achieve our goal of sustainable growth and development in chemistry”, Christian Jourquin, CEO of Solvay, said in a statement. “We see the possibility of doubling our [recurring earnings before interest and taxes, depreciation and amortization] to almost 2 billion euros and creating a major global chemicals platform under the banner of Solvay.”
The acquisition will be earnings accretive from 2011, with annual cost synergies of 250 million euros expected within three years, which will be achieved through the reduction of external costs and “without major downsizing plans.”
The aim of the deal is to create a global chemical company with an enlarged business portfolio. Solvay is a leader in high performance specialty polymers, soda ash and hydrogen peroxide, while Rhodia is strong on specialty materials (silica and rare earths), products for consumer markets and engineering plastics based on nylon 6/6.
Solvay says the group will also concentrate on growth in emerging markets, which already generate 40 percent of sales for the combined group.
Jean-Pierre Clamadieu, chairman and CEO of Lyon, France-based Rhodia, will take on the role of deputy CEO once the offer is closed. He is also expected to succeed Solvay’s current CEO Christian Jourquin when he retires.
The deal is conditional upon approval from EU and US anti-trust authorities.
During the recession, Solvay announced major reorganisation plans, including the sale of its pharmaceuticals business to focus on chemicals and plastics. Last year it reorganized further, reducing annual costs by 65 million euros and making 800 redundancies.
France-based Rhodia has 14,000 employees worldwide and generated sales of 5.23 billion euros in 2010. Solvay had sales of 7.1 billion euros last year.
In related news, Solvay has also announced to plants to unite Solvay Advanced Polymers, Solvay Padanaplast, Solvay Solexis and SolVin PVDC as a single business unit: Solvay Specialty Polymers.
Headquartered in Bollate, Italy, the company’s activities employ more than 2,500 across 26 locations throughout North and South America, Asia and Europe.
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