Approval & Completion of the capital increase linked to the acquisition of Cytec
CEO Jean-Pierre Clamadieu comments on the outcome of the recent General Meeting and reviews the strategic logic of the Cytec acquisition :
A decisive step-change in the Group's transformation
Following the merger with Rhodia in 2011, Solvay has set in motion a change in its activity portfolio by means of external acquisitions and sales of activities. Today, the Cytec merger is a step-change in Solvay's transformation, strengthening its presence in activity domains with high added value and resilience, and improving its geographic exposure.
With the transaction expected to close by year-end, our goal is to be fully operational from day one. For several months already, 200 Solvay and Cytec people have been working together and doing everything possible to make sure that, when the time comes, we can integrate our activities quickly and efficiently. Based on our synergies and our innovations, we will have more solutions to help customers meet the challenges of a more sustainable development, while improving the Group's growth dynamic and its value creation.
Cytec: more growth, less cyclicality, greater profitability
The operation aims to propel Solvay into the world number two position in composite materials for the aircraft industry, to accelerate the growth of its Advanced Materials platform in this market, and to strengthen its position in specialty formulations through Cytec’s very strong technical expertise for the mining industry. More generally, Cytec allows us to take a big step forward in offering sustainable solutions to our customers, to become the key player in lightweighting materials and in so doing strengthen our CO2reduction strategy.
This strategic alignment is excellent for Solvay as both companies share the same vision and have strong synergies. The integration of Cytec will enhance the Group's profile in terms of its growth capacity and its resilience (via entering the aerospace market and its stronger presence in North America), and also its profitability.
The launch of the capital increase
SOLVAC, which holds over 30% of Solvay, has announced its support and has confirmed its willingness to participate in the transaction and the capital increase with preferential subscription rights. This is the sign of a profound confidence in the evolution of the Group's positioning, in its development strategy, and its ability to create greater value through the merger with Cytec.
The many investors we have met in recent weeks are very positive on the strategic rationale, the complementarity of the two groups and the benefits Solvay can draw from such a partnership. This is particularly true of American investors who are familiar with Cytec and appreciate the quality of this company. We will work to deliver the objectives announced to the market in terms of earnings growth, cash generation and return for shareholders. This is what we will be working on to achieve as soon as the acquisition is closed and the integration process has started.
We just successfully launched a hybrid and other bonds issue of more than 2 billion euros. The next step will be the decision of the Board of Directors to launch the operation. They will decide in due course on the conditions and appropriate timing, in the interest of the Group and its shareholders. We are strongly counting on your support once the operation is launched. In this way you will be able to participate in the new prospects for our Group's growth and sustainable value creation."Completion of the transaction
||Solvay announced on December 17 the finalization of the financing of its acquisition of U.S.-based Cytec. This acquisition will significantly boost Solvay’s portfolio of advanced materials with lightweighting solutions for the aerospace and automotive industries, and will furthermore strengthen its formulations know-how in mining chemicals.||
||“We accomplished the acquisition and financing of Cytec in less than five months and are forging ahead with the integration of its businesses and teams into the Group’s fully operational new structure. Cytec represents a step-change in Solvay's transformation, which will reinforce our innovation capabilities and our strong earnings growth momentum into 2016 and beyond.” said Jean-Pierre Clamadieu, CEO of Solvay.|
Cytec's ID card
- Sales of USD 2 billion
- 20% operational margin
- 4 600 employees
- 29 production and R&D sites
- Number 2 worldwide in materials for the aircraft industry (out of 3 major players)
- Number 2 worldwide in industrial materials (out of 6 major players)
- Number 1 worldwide in mineral separation processes (niche market)
Aerospace: a new key market for Solvay
Strong synergies between Cytec and Solvay
- Solvay becomes the world number 2 in composite materials for aerospace
- Solvay accelerates the growth of its Advanced Materials platform with a major input in composite materials
- Solvay strengthens its Advanced Formulations division with the world's leading specialty mining chemicals provider
- Solvay improves its earnings growth dynamics
- Synergies estimated at over €100 million per year pre-tax
- Acquisition accretive to adjusted EPS from year two onwards