Belgian plastics and chemicals company Solvay and Paris-listed Rhodia announce the signing of a framework agreement according to which Solvay will launch a friendly cash offer for 100% of the share capital of Rhodia. The cash offer at EUR 31.60 per s
Belgian plastics and chemicals company Solvay and Paris-listed Rhodia announce the signing of a framework agreement according to which Solvay will launch a friendly cash offer for 100% of the share capital of Rhodia. The cash offer at EUR 31.60 per share values the equity of Rhodia at EUR 3.4 billion and the enterprise value at EUR 6.6 billion.The creation of a new group will accelerate the shared ambition to create a large global chemical company committed to sustainable development. The new group will capitalize on its large geographic footprint, the quality and balance of its portfolio, its industrial excellence and the solidity of its financial base to fully capture new growth opportunities, especially in high-growth markets.
The offer represents a premium of 50% compared to
the closing price of Rhodia on the 1st of April 2011 and a premium of 44%
compared to the average closing share price over the last three months. The
Offer will be launched in France and extended to the United States of America.
The transaction has been recommended unanimously by the board of directors of
Rhodia.
The acquisition of Rhodia will be earnings accretive from the first year. Solvay
will fully finance the transaction with its cash resources and its financial
structure will continue to be conservative and solid.
The new group's strategy is based on the
following strengths: 90% of its combined sales of EUR 12 billion are realized in
businesses where it is already among the top three worldwide. Solvay is a leader
in high performance specialty polymers, in soda ash and hydrogen peroxide, while
Rhodia holds leadership positions in specialty materials (silica, rare earths),
products for consumer markets (surfactants, natural polymers, acetate tow) and
engineering plastics based on polyamide 6.6.
Future geographic expansion will be driven by a significant presence in the
emerging markets, which already generate 40% of sales of the combined group. The
complementary nature of the industrial activities of Rhodia and Solvay should
provide the combined group with a balanced presence in its different market
segments: specialty chemicals for consumer goods, construction, automotive,
energy, water, environment, and electronics.
Beyond the revenue synergies, the annual cost synergies are estimated to amount
to EUR 250 million within three years. The cost synergies are expected to result
from the alignment of cost structures in line with good industry practices used
in groups of a comparable size. Two thirds of these synergies will come from
external cost optimization. Therefore, no major downsizing is planned in the
context of this combination.
To facilitate a smooth and rapid integration of the two groups, Jean-Pierre
Clamadieu, Chairman and CEO of Rhodia, will join Solvay?s Executive Committee in
the role of Deputy CEO once the Offer is closed. Jean-Pierre Clamadieu is also
intended to succeed Solvay?s current CEO Christian Jourquin upon his retirement.
In this context Jean-Pierre Clamadieu will be proposed for appointment to the
board of directors of Solvay at the AGM in May 2012. In addition, Gilles Auffret,
COO of Rhodia, will be appointed CEO of Rhodia and member of the Executive
Committee of Solvay.
"We are very proud to announce this proposed friendly business combination. 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", said Christian Jourquin CEO
of Solvay. ?We see the possibility of doubling our REBITDA to almost EUR 2
billion and creating a major global chemicals platform under the banner of
Solvay. I am convinced that this project based on the complimentary strengths of
our forces will be supported by the employees of both groups. We look forward to
jointly developing innovative solutions to some of the greatest challenges
facing humanity in the twenty-first century."
"The project presented today is a fantastic opportunity for Rhodia, for its
employees and its shareholders. By joining Solvay, we will accelerate the
overall development of our business, capitalizing on a strong financial
structure, our leadership positions, and an exceptional geographic footprint.
More importantly, I feel that the similar cultures of the two groups will ensure
a successful integration resulting in one strong and ambitious group." said
Jean-Pierre Clamadieu, Chairman and CEO of Rhodia.
A tender offer conditional upon the approval by E.U. and U.S. anti-trust
authorities and upon a minimum acceptance level of 50% plus one share will be
filed in the coming days. Solvay expects that the Offer will be closed by late
August 2011. Upon reaching a 95% acceptance level Solvay reserves the right to
conduct a squeeze-out of the remaining shares. Bonds convertible into and / or
exchangeable into new or existing shares (OCEANE) issued by Rhodia will also be
offered a price of EUR 52.3 per OCEANE.
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