“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 Rebitda to almost €2bn and creating a major global chemicals platform under the banner of Solvay.”
The acquistion will be earnings accretive from 2011, with annual cost synergies of €250m 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 polyamide 6,6.
Solvay says the group will also concentrate on growth in emerging markets, which already generate 40% of sales for the combined group.
Jean-Pierre Clamadieu, chairman and CEO of 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 reorganised further, reducing annual costs by €65m and making 800 redundancies.
France-based Rhodia has 14,000 employees worldwide and generated sales of €5.23bn in 2010. Solvay had sales of €7.1bn last years.
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 group’s activities employ over 2500 people across 26 locations throughout North and South America, Asia and Europe.