Solvay SA of Belgium to acquire US’ Cytec Industries
29 Jul 2015
Solvay SA, the Belgian maker of chemicals and plastics, will acquire Cytec Industries Inc for $5.5 billion to emerge as the world's second-largest producer of aerospace composite materials.
According to the Brussels-based company, Cytec shareholders would receive $75.25 a share in cash, or 29 per cent higher than yesterday's closing price for the Woodland Park, New Jersey-based Cytec.
The transaction comes as part of chief executive officer Jean-Pierre Clamadieu's strategy to shift Solvay away from commodity products.
The 152-year-old company was focused on more specialised polymers used for the replacement of heavier metal parts in cars, appliances and airplanes. Cytec, a leader in specialty chemicals for enhancing mining separation processes was developing composites for the car industry.
''This is a very significant, but not the last step in the transformation of Solvay,'' Clamadieu said on a conference call with reporters. ''We will continue to look for opportunities to divest or invest in businesses.''
The purchase would boost adjusted earnings per share after the first year of completion, according to Solvay. Solvay expected annual pretax synergies of over €100 million ($111 million) within three years.
Solvay declined 1.3 per cent to €126.30 in morning trading at Brussels. The stock was up 14 per cent this year through yesterday, giving the company a market value of €10.8 billion.
According to Clamadieu, antitrust issues could be dealt with easily, and was confident of completing the transaction in the fourth quarter.
Cytec is among the world leaders in composite materials, mining chemicals, recognised by its customers as a consistently successful innovator and provider of high-performance and value-added solutions. In the fast-growing composite materials sector, which represents two thirds of its sales, its principal market is primary and secondary structures for aircrafts.
It is also developing new technological applications for composites in automotive. Cytec is the leader in tailored specialty chemical formulations to enhance mining separation processes.
Through the acquisition of Cytec, Solvay will gain critical scale and immediate customer intimacy in aerospace. In the automotive market, Solvay's strong positions with original equipment manufacturers and tier-one suppliers will help bolster Cytec's growth.
Moreover, Cytec will significantly reinforce Solvay's sustainability profile as its offerings are addressing planet's challenges.
With Cytec, Solvay will stand out stronger in reducing CO2 emissions through its lightweighting solutions and in dealing with the increasing scarcity of resources through more efficient and cleaner mining technologies.
