Solvay explores splitting into two independent listed companies

Solvay explores splitting into two independent listed companies

New company structure is designed to sharpen strategic focus, optimize growth opportunities, and build the foundation for the future

  • By ICN Bureau | March 15, 2022
Solvay today announced it is reviewing plans to separate the Company into two independent publicly traded companies:
- EssentialCo would comprise leading mono-technology businesses including Soda Ash, Peroxides, Silica and Coatis, which are reported as the Company’s Chemicals segment, as well as the Special Chem business. These businesses generated approximately €4.1 bn in net sales in 2021.  
- SpecialtyCo would comprise the Company’s currently reported Materials segment, including its high-growth, high-margin Specialty Polymers, its high-performance Composites business, as well as the majority of its Solutions segment, including Novecare, Technology Solutions, Aroma Performance, and Oil & Gas. These businesses combined generated approximately €6.0 bn in net sales in 2021.
"The plan to separate into two leading companies represents a pivotal moment in our journey to transform and simplify Solvay. Since we first launched our G.R.O.W. strategy in 2019, we have taken a number of actions to strengthen our financial and operational performance, focus our portfolio on higher growth and higher margin businesses, and reinforce our business purpose across the organization. We have changed the culture profoundly, with a passion for performance and meritocracy at its core. Our successful focus on cash, costs, and returns has strengthened the Materials and Solutions segments to be more self-sustaining and profitable. At the same time, the Chemicals segment has continued its strong track record of resilient cash generation. Notwithstanding the challenges of the current global environment, we are confident that pursuing this plan would enable us to create compelling value for shareholders over the long-term."
"Our talented and dedicated employees have worked hard to transform Solvay, and their efforts have enabled us to take this important next step towards the creation of two strong companies.  We expect to create opportunities in each company for our employees to thrive and grow, and we are confident that both companies will maintain the same levels of customer focus and commitment to value creation." says Ilham Kadri, Solvay CEO.
"Today's news is an important milestone for Solvay. In the last decade, Solvay has undergone major evolutions and the transformation has accelerated under Ilham’s leadership with a focus on profitable growth and simplifying the Company, all while driving innovation and raising the bar in sustainability. This exciting announcement marks the next phase of the transformation. On behalf of the entire Board, we look forward to guiding Solvay’s next chapter of sustainable value creation for shareholders, customers and employees." said Nicolas Boël, Chairman of Solvay Board of Directors.
Each company would have a tailored capital structure that best supports its value creation objectives. SpecialtyCo would be committed to a strong investment-grade rating. The company would have full financial flexibility at the time of separation to fund its growth plan. EssentialCo would maintain a prudent financial policy to support cash generation. The current investment grade rating of Solvay SA is intended to be preserved until the separation. Solvay SA is committed to offer current USD and EUR senior and hybrid bondholders the option to be transferred to SpecialtyCo in due time. The dividend at the outset is intended to be aligned with Solvay’s current level.
Under the separation plan, Solvay’s shareholders would retain their current shares of Solvay stock,  which will continue to be listed on Euronext Brussels and Euronext Paris. The separation would be effected by means of a partial demerger of Solvay whereby the specialty businesses will be spun off to SpecialtyCo. Solvay shareholders at the time of separation would receive shares in SpecialtyCo pro rata to their shareholding in Solvay SA. The shares of each company would be expected to be listed on Euronext Brussels and Euronext Paris. The company expects to structure the separation in a manner that would be tax efficient for a significant majority of shareholders in key jurisdictions. 
The composition of the Boards and management teams, as well as naming for each company, will be provided at a later date.
The transaction is subject to general market conditions and customary closing conditions, including final approval by Solvay’s Board of Directors, consent of certain financing providers and shareholder approval at an extraordinary general meeting, and is expected to be completed in the second half of 2023. The Board of Directors of Solvac, Solvay’s long-standing reference shareholder, has confirmed its support of Solvay’s transaction.
Solvay envisages updating investors on the strategies for SpecialtyCo and EssentialCo prior to the completion of the separation. 

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