Belgium’s Solvay to buy Chemlogics for $1.345 billion

Belgian chemicals company Solvay SA yesterday struck a deal to buy privately-held Chemlogics for $1.345 billion in cash in order to strengthen its position in chemicals that serve the fast-growing US oil and gas industry.

Founded in 2002 and headquartered in Paso Robles, California, Chemlogics is an expert in friction reducers, non-emulsifiers and extraction technologies used in drilling and complement Solvay's Novecare range of surfactants and natural polymers.

In addition, Chemlogics' customer portfolio in the US complements Novecare's global customer base. Together, both companies will have a significant share of the $8-billion US oil and gas exploration and production market.

Chemlogics, with 277 employees and sales of $500 million in the last 12 months, is part-owned by One Equity Partners.

All its assets are located in the US and include three manufacturing sites, eight formulation centers and six research and technical facilities.

Solvay said that Chemlogics's enterprise value represents a multiple of 10.7x last-twelve-months EBITDA, and 8.7x including tax benefits.

Although the acquisition will be financed with available cash, Solvay intends to issue hybrid bonds for approximately €1 billion, which will further strengthen its balance sheet ahead of its refinancing of debt maturities from 2014 onwards.

Solvay said that the acquisition will help it become a leader with an extensive portfolio of tailored chemical solutions for the fast-growing oil and gas market, serving stimulation, cementing, production and water management applications.

''This acquisition accelerates Solvay's ongoing transformation towards an innovative chemical solution provider focused on high growth and strong margin businesses with a more balanced geographical and market presence,'' said Jean-Pierre Clamadieu, CEO of Solvay.

''Our expansion in the energy sector builds on our strategy to provide differentiated solutions addressing the sustainability challenges that society faces with an increasing number of consumers and scarce resources,'' he added.

Brussels-based Solvay serves diversified markets, generating 90 per cent of its €12.4-billion annual revenue in activities where it is one of the top three worldwide.